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Topic:-Memorandum of Association & Articles of Association: Index

The document discusses the Memorandum of Association and Articles of Association for companies. It defines what an MOA is, its importance and key clauses. An MOA establishes the scope of a company's business and its relationship with shareholders. It must be filed for company registration. The document also outlines what an AOA is, how it establishes internal governance rules, and that an AOA must also be filed along with an MOA to complete company incorporation.

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Brajesh Singh
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100% found this document useful (1 vote)
791 views11 pages

Topic:-Memorandum of Association & Articles of Association: Index

The document discusses the Memorandum of Association and Articles of Association for companies. It defines what an MOA is, its importance and key clauses. An MOA establishes the scope of a company's business and its relationship with shareholders. It must be filed for company registration. The document also outlines what an AOA is, how it establishes internal governance rules, and that an AOA must also be filed along with an MOA to complete company incorporation.

Uploaded by

Brajesh Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 11

Topic:- Memorandum of

Association &

Articles of Association

Index

 What is the Memorandum of Association-Page-4

 Prescribed forms of MOA-Page-5

 Importance of the Memorandum of Association-Page-5-6

 Uses of the Memorandum of Association Page-6-9

 Conclusion-Page-9

 Introduction:- Articles of AssociationPage-9-11


 Articles of Association will bind the following-Page-11
 The articles shall address the following-Page-11

 Shares, unless by a company limited by a guarantee- Page-11-12

 Entrenchment-Page-13

Memorandum of Association

What is the Memorandum of Association?

Memorandum of Association (MOA) is a legal document that specifies the scope of business activities of

the company and information about the shareholding of the company. The MoA is a document prepared for

the Company registration procedure. Sometimes, it is called the charter of the company other times, it is

just called a memorandum. In most countries, the MOA has to be filed as a ROC Compliance which also

includes articles such as MGT-7 and AOC-4 in India. In an attempt to ease the compliance of company

incorporation in India, the Ministry of Corporate Affairs (MCA) has introduced online filing for company

registration.
The MCA wishes to accomplish One Day Company Formation with the new SPICe forms. After the SPICe

form has been prepared, individuals wishing to register a company must submit the e-MoA (INC-33)

electronic form along with e-AoA (INC-34) to complete the company incorporation procedure.

The Memorandum of Association (MOA) defines the company’s relationship with its shareholders. It is the

most important document of a company as it states the objectives of the company. It also contains the

powers of the company within which it can act.

Prescribed forms of MOA

Tables  Company 

Table A A company limited by shares

Table B A  company limited by guarantee and not having a share capital

Table C A company limited by guarantee and having a share capital

Table D An unlimited company

Table E An unlimited company having a share capital

Importance of the Memorandum of Association:


It determines the area of operation 

It provides a list of activities that an organization can undertake. Apart from this list, any other operation will

be void.

It determines the relationship of the company with outsiders 

The sole purpose of this document is to disperse the necessary information to the shareholders, creditors

and other stakeholders. It showcases the range of enterprise and the powers of it.

Fixes charter of the company 

The memorandum of association is considered as a fixed charter for the company (as per section 16 of the

Companies Act).

It creates the basis of incorporation

The memorandum of association with the registrar of the companies in order to get it incorporated. For this,

it should be signed by at least 7 persons in the case of a public company and 2 persons in the case of a

private company.

Uses of the Memorandum of Association

The Memorandum of Association (MoA)  helps establish the extent and scope of the business activities that

a particular company can carry out. The company can perform business activities that they have specified in

the Memorandum of Association (MoA). If you wish to expand your business activities into other areas of

the market, you will have to make changes to the memorandum accordingly.
A Memorandum of Association (MOA) is a legal document applicable to limited liability companies.

Limited Liability Companies include Private Limited Company (Pvt Ltd) and Limited Liability

Partnership (LLP). MOA is used to define the company’s relationship with the shareholders. The MOA is a

document of public record i.e. anyone who wishes to see a company’s MoA can do so under the Right to

Information (RTI) Act. MoA also describes the company’s name, the physical address of the registered

office, the names of shareholders and the distribution of shares. Sometimes, MoA also contains the

exemptions and tweaks for a particular company. For eg., Private Limited Companies have a lot of

exemptions as compare to other companies. Read Exemptions Private Limited Company.

The MOA and the Articles of Association (AOA) put together, serve as the constitution of the company. The

MOA is not applied in the U.S. but is a legal requirement for limited liability companies in European

countries including the United Kingdom, France, and the Netherlands, as well as some Commonwealth

nations.

Memorandum of Association  Clauses

Memorandum of Association (MOA) includes six different clauses as mentioned below:

 Name Clause

 Domicile Clause

 Objects Clause

 Liability Clause

 Capital Clause

 Subscription Clause

Name Clause
The name of the company is its first unique identity. Thus the name clause of the memorandum consists of

the authentic, legal and approved name of the company. Company names should not bear any similarities to

a company registered with a similar name because many times these companies protect the name of their

companies via a Trademark Registration procedure.

Domicile Clause

The domicile clause comprises all possible details of the registered office of the company. It has the name of

the State or Union Territory of the registered office and may and may not have the exact address of the

office. It also has the names of the registrars enrolled.

Objects Clause

Objects Clause constitutes the main body of the memorandum. It provides a list of all the operations of the

company. Every motive and operation the company indulges in must be mentioned in the object clause.

Also, any such operation which is not mentioned in the object clause is considered to be beyond the reach of

the company.

The objects of a company fall into two categories as prescribed below:

1. The proposed objects of the company for which it is being incorporated

2. Matters considered necessary in furtherance thereof

Apart from just stating out the objectives of the company the statement of objects in the company’s MoA

empowers the people associated with the company with the following benefits

 It gives protection to the subscribers as they have complete knowledge of where their valuable

money is being invested.

 Protects the individuals and/ or companies that deal with the concerned company as they have

knowledge of the extent of the companies powers.


 The board of directors of the company is restricted from using the funds of the company only to the

objects specified in the Memorandum.

Liability Clause

Liability Clause mentions the liability of every member of the Company. It simply states that every member

of the company has limited liability. The clause also specifies the amount of contribution of agreed upon for

each individual participant in case the company is closing or winding up.

Read: Closing a Private Limited Company and Closing an LLP.

Irrespective of the financial state of the company, no member can be told to pay more than the amount that

remains unpaid on his/her shares.

Capital Clause

This clause mentions the share capital with which the company is registered. In addition to this, the capital

clause should also mention the types of shares, the number of each type of share, and the face value of each

share.

Private companies and public companies not intended to be listed in the stock exchange may assume any

face value depending on a number of factors however, public companies to be listed will have a prescribed

face value of the shares.

Subscription Clause

The last and final clause of the Memorandum of Association is called the subscription clause. The

subscription clause basically lists down the motives of the shareholders behind the incorporation of the

company and also states that the subscribers are agreeing to take up shares in the company. It also specifies

the number of shares taken up by each subscriber. It is all according to the details specified in the MoA

Subscriber Sheet.
Conclusion

In the end, we’d like to say that the Memorandum Of Association is a very important document without

which the company cannot be incorporated. It is a charter document of the company and MOA and AOA

both act as a constitution of the company.

Article of Association

Introduction

The Article of Association (AoA) were clearly defined and laid down in Ashbury Railway Carriage Co. vs.

Riche

[(1875) LR 7 HL 653].  “The Article of Association are subsidiary to the Memorandum of

Association(MoA). The AoA define the duties, the rights and the powers of the governing body as between

themselves and the company at large, and the mode and form in which the business of the company is to be
carried on, and the mode and form in which changes, from time to time, in the internal regulations of the

company may be made”.

The AOA (Article of Association)  of a company consists of the norms, bye-laws, rules, and regulations for

the management of internal affairs and of a Company. It has rules for the proper governance of the

Company. Thus they define how the Board of Directors, individual directors, employees, etc. must conduct

themselves in the management of the company.

Articles of Association (AOA), are one of the mandatory documents required to be submitted to the

registrar’s office during the initial steps for company registration. All types of companies require Articles of

Association. Articles of association along with the Memorandum of Association, together with outline the

constitution of the Company.

AOA also acts as guidelines for the directors of the Company, stating their authority and duties. They are

also relevant to potential investors as they set out the rules and regulations of the Company.

The articles of association, much to the satisfaction of the shareholders, places restrictions on the company’s

powers. This ensures that the directors won’t make investments without consulting the shareholders.

In Naresh Chandra Sanyal vs Calcutta Stock exchange Association Ltd (AIR 1971 SC 422), the Supreme

Court said that “the articles of association also establish a contract between the company and the members

and between the members inter se. This contract governs the ordinary rights and obligations incidental to

membership in the company”.

The Articles of Association are very important for the functioning of various organizations. Any act or

decision in conflict with the articles of association can be declared as ultra vires and hence void. Also any

act or decision contrary to the Articles of association Companies Act, 2013 are automatically void.

Articles of Association will bind the following


1. Members of the company

2. Company to the Members

3. Members to Members

4. Company to outsiders

The law assumes that any outsiders dealing with the company have read the articles of association.

The articles shall address the following

 Liability of members;

 Duty of the directors

 Directors’ meetings, voting, delegation to others, and conflicts of interest;

 Record book of all the decisions taken by directors.

 Appointment and removal of directors;

Shares, unless by a company limited by a guarantee

(a) issuing shares;

(b) different share classes;

(c) Share certificates;

(d) share transfers;

• Dividends and other distributions to members;

• Members’ decision making and attendance at general meetings;

• Means of communication;

• Use of the seal, if applicable; and

• Directors’ indemnity and insurance.

The following entities must have Articles of Association


1. Unlimited Company

2. Company Limited by Guarantee

3. Private Company Limited by shares

4. Public Company limited by shares

Companies can frame their own articles of association or use the model articles of association provided in

respective forms specified in Table F, G, H, I, and J in Schedule I of the Companies Act 2013.

Articles of association can be amended by way of addition, deletion, modification, substitution, alteration, or

by any other way. It can be done by an agreement of all the members in the case of a private limited

company, in accordance with rules under the articles of association, and by a special resolution in the case of

a public company and then filing Form MGT-14 with the Registrar along with a copy of the amended

Articles of Association.

Entrenchment

Articles of Association can also contain provisions for entrenchment. Entrenchment means that specified

provisions of the articles may be altered only if conditions or procedures are more restrictive than those

applicable in the case of a special resolution. That means making it more difficult to amend the articles of

association by making the amendment procedure harder than passing a special resolution or impossible. This

can be done at the time of incorporation or by an amendment.

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