What does Memorandum of company include

INTRODUCTION

A company is formed when a number of people come together for achieving a specific purpose. This purpose is generally commercial in nature. The main purpose of business is to earn profit from as much as possible from the business activities. Every company has its own rules and regulations to be followed while running a business. Apart from that, the company has to fulfill various requirements for conducting business, one such essential and principal document required for this purpose is the Memorandum of association (MOA).to incorporate a company, an application has to be filed with the registrar of companies (ROC). This application is required to be submitted with the Memorandum of association. MOA is also called the charter of the company. It is a legal document that specifies the scope of business activities of the business and the information about the shareholding of the company.

DEFINITION OF MOA

Section 2(56) of the companies act, 2013 defines a Memorandum Of Association. It states that a “memorandum means two things :

·         Memorandum of association as originally framed;

Memorandum of Association framed refers to the memorandum as it was during the incorporation of the company.

·         Memorandum as altered from time to time;

This means that all the alterations that are made in the memorandum from time to time will also be a part of the Memorandum Of Association.

The section also states that alterations must be in pursuance of any previous company or the present Act.

MEANING OF MOA

Memorandum Of Association is a legal document that describes the purpose for which the company is formed. It defines the powers of the company and the conditions under which it operates. It is a document that contains all the rules and regulations that govern a company’s relationship with the outside world. It generally contains all the rules regarding the creditors, debenture holders, shareholders, and other stakeholders of the company. It is very necessary for the company to prepare the Memorandum Of Association. And it is the foundation on which the company is made. Any stakeholder wants to enter into any contracts with the company, all he has to do is to pay the required fees to the Registrar of Companies and obtain the Memorandum of Association.

TYPES OF MOA

There are five main types of memorandum of association, they are as follows.

  1. Table A – if shares end up limiting a company. 
  2. Table B – if a guarantee limits a company. 
  3. Table C – if a guarantee along with share capital limits a company. 
  4. Table D – if it is an unlimited company. 
  5. Table E – if it is an unlimited company and has a share capital.

CONTENTS OF MOA

The contents of MOA consist of different clauses. Each and every clause plays a very vital role in the organization. Let’s have a glimpse of all these in detail.

1.      Name clause- The name clause of moa specifies that the titles of the private company end with ‘private limited. On the other hand, the titles of all the government should end with limited.

The companies under section 8 of the act, may need not follow these rules. These companies can be identified by certain words like-Association, federation, foundation, confederation, forum, chamber, council, and electoral trust.

2.            Registered office clause – It contains the state of the registered office where the organization is located exactly. It is very important to specify the branch of the registered office where the organization got registered.

3.            Object clause- This segment of the memorandum of association explains the motto of the organization and its activities. After a few months if there is a change in activities and operations, then the head of the institution needs to change the name of that organization within 6 months. Otherwise, it will become an offense.

4.            Capital clause- It concentrates on the capital invested by two or more shareholders of one company. We need to furnish the information regarding the amount of share between the shareholders and how they formulate their rules etc. in the memorandum of association.

5.            Liability clause –  This is also another important class of memorandum of  Association. The liability of members is either limited or unlimited in the firm. if the company is limited by shares, it needs to specify the amounts held by the shareholders and whether they are paid or unpaid. All these aspects need to be mentioned clearly in the MOA.

6.            Association clause- It is the last but not least, class of the memorandum of association. Here one should mention the exact idea and goal of the owner of the company.

CONCLUSION

So, a memorandum of the company is a fundamental document of the company. It is obligatory for the company to prepare a memorandum of the company. The content of an MOA includes a name clause, registered office clause, capital clause, object clause, liability clause, and Association clause. Hence, it is a fundamental public agreement that involves operational activities, rights, powers, etc. In the definition of a memorandum of association, we can conclude that it is important to check the format and all clauses.

REFERENCES

Section 2 (56) of Companies Act,2013

https://www.vedantu.com/commerce/memorandum-of-association

https://www.upcounsel.com/explain-the-contents-of-memorandum-of-association

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