All you need to know about the Subscription Clause under MOA

Introduction

A subscription clause is one of the necessary clauses of a memorandum of association. Every company is an artificial person governed by the terms of its articles of association and memorandum of association. Companies benefit from continuous succession as a result. This means that the company will continue to exist even if its owners, members, etc. change. In this article we will discuss all about the Subscription Clause under MOA.

What is the 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. Their names, signatures, residences, and other facts are included. The “subscription sheet” is a document that contains these details. The MOA subscription sheet is an important document.

Who is a subscriber?

A subscriber is one of a company’s original stockholders. A private limited company requires two subscribers, whereas a public company requires seven subscribers. A subscriber can often be any person, business, or large organization. No matter the business develops and changes, its founders/subscribers will remain same. (There is just one subscriber required to establish a one-person business, and that subscriber must be an individual.)

What is a Subscriber Sheet?

An important document that must be submitted with the MOA during the company registration procedure is the subscriber sheet to the MOA. It gives information on the founding members of the business. The necessary information includes:

• The names of the subscribers
• The information of the father or spouse of the subscribers.
• The full address of subscribers who have a working pin code.
• Occupation and the Pan Card number of the Subscribers
• Signatures of the subscribers. The signatures are very essential since they legally link the subscribers to the company and formally designate them as its first shareholders.
• The signature of a director or partner on behalf of a subscriber if it is a company or partnership firm.
• The entire amount of shares that each subscriber has purchased should be noted on the subscription sheet. In other words, it is necessary to mention each subscriber’s shareholding status.
• Every subscriber sheet needs a witness, who verifies the information on the sheet. Generally, this witness is a company secretary or chartered accountant. The subscriber sheet must also contain the witness’s basic information and signature.

NRI and international customers

• When an NRI signs the subscriber sheet from a location outside of India, their signature must be witnessed and certified by a public notary of the nation they are in or by a representative of the embassy. In case the subscriber is a foreign citizen, then:
• If they are citizens of a country covered by the Hague Apostille Convention, 1961, their signature, address, and evidence of identification must be approved by a public notary in that nation and must be officially certified in accordance with the Hague Convention.
• If the subscriber is a Commonwealth nation resident, their signature, evidence of identification, and residence must be notarized by a public notary in their home country.
• The subscriber’s signature, identity evidence, and address must be notarized by a notary public of their country if they reside in a country that is not a signatory to the Hague Apostille Convention of 1961 or a Commonwealth nation.
• The subscriber’s signature, identity evidence, and address must be notarized by a notary public of their country if they reside in a country that is not a signatory to the Hague Apostille Convention of 1961 or a Commonwealth nation.
• Documents must be verified by a consular or diplomatic officer according to the Diplomatic and Consular Officer Act 1948.
• If a foreign citizen is living in India when they sign up as a subscriber, as long as they have a current business visa, they are recognized as a legitimate subscriber.

Modifying the subscription clause

The memorandum of association is often a document that can be changed. The MOA can be modified, almost in its entirety. The subscription clause is the only exception. There can never be a change to the subscription clause.

Conclusion

Subscription clause is the sixth and last clause of the MOA which should specify the subscribers’ intent to establish the business and their agreement to purchase the quantity of shares specified in the Memorandum. The Companies Act stipulates that, the company must receive applications for a specific minimum number of shares before moving on with the allotment of shares in order to prevent businesses from starting out with insufficient funds.