Major Clauses of Memorandum of Association(MOA)

Introduction

“The Companies Act of 2013 mandates that the Memorandum of Association (MOA) include specific clauses. This legal document is created during a company’s foundation and registration process. Individuals form a company through a memorandum. This article discusses the importance and clauses of the memorandum of association.”

What is MOA (Memorandum of Association)?

The MOA stands for Memorandum of Association which is one of the important documents for company registration. The company must mention all its activities in the MOA. In simple terms, the Memorandum of Association bridges the company, its activities, and its relationship with the shareholders. The company is liable only for the acts specified in the MOA.

What is Association Clause?

Individuals form a company through a memorandum. People who wish to join the organization must sign the company’s Memorandum. The association clause confirms these signatures.

Clauses of Memorandum of Association (MOA)

The contents of the memorandum are mentioned according to Section 4 of Companies Act 2013. There are 6 major clauses of the Memorandum of Association.

1. Name Clause: This clause outlines the name of the company. The company name shouldn’t be the same as any other existing company and The work of the company’s Clause is to look out whether the name of the company is legally appropriate. For example – if it is a private company so it’s mandatory to suffix the word “Private Limited”.
2. Domicile Clause : The ‘domicile’ clause is the second clause of the MOA which identifies the location of the company’s registered office. The state or union territory where the company’s registered office is located shall be listed in the domicile clause.
3. Object Clause : The third clause in a company’s Memorandum of Association, the object clause, outlines the goal associated with the commercial reason for establishing the company.
4. Liability Clause : This is the fourth Clause in the company’s memorandum. A limitation of liability provision, or liability clause, outlines the types of damages each party will pay to the other according to the contract’s terms and circumstances.
5. Capital Clause : This is the fifth Clause in the company’s memorandum, also known as the authorized/nominal capital of the company. This clause specifies the maximum amount of capital that an organization may raise. Additionally, this explains the division of the capital into a certain number of shares with a fixed amount.
6. Subscription Clause : The sixth and last primary clause of the Memorandum of Association is the subscription clause. The information about the company’s initial subscribers is provided in this clause. Also it includes names, signatures, addresses, and other information.

What is the importance of Memorandum of Association?

• Determines the operational area : There is a list of possible activities that an organization can conduct.
• Determines the company’s relationship with external parties : The main purpose of this document is to provide the owners, creditors, and other stakeholders with the important information.
• Fixed charter of the company : For the company, the memorandum of association serves as a fixed charter (as per section 16 of the Companies Act).
• Founder’s Declaration : Submit the memorandum of association to the registrar of corporations to incorporate it. Sign it with at least two signatures for a private firm and seven for a public corporation.

Every organization must have MOA (Memorandum of Association), which outlines the parameters of its functioning. The MOA specifics on the company’s overall organizational structure. It must be submitted to the Companies Registrar.