MOA - Memorandum of Association
The Memorandum of Association (MOA) of any Company is the foundation of any company which is being incorporated. MOA is the constitution of a Company, and it defines the scope of powers and rights within which a Company operates. Provisions of Law prevail in case there is any conflict between the Companies Act and Clauses in Memorandum.
Objects are the part of the Memorandum that defines the objectives of the Company for which it is being formed. The Company cannot operate beyond its object clause. In any scenario, no company can act against the provisions of its Memorandum, and if it does so, such transaction will be ultra vires and hence void. If the Company enters into a contract, arrangement or agreement with any third party, such Memorandum is used as a public document.
Memorandum of Association must be made as per the format given in the Table A-F of schedule I of the Companies Act 2013. The following Tables are used for different kinds of companies depending on their status such as:
- Table A
MOA of Companies limited by shares.
- Table B
MOA of the Companies is limited by a guarantee and has no share capital.
- Table C
MOA of the Companies is limited by guarantee but has a share capital.
- Table D
MOA of the Unlimited Companies.
- Table E
MOA of the Unlimited Companies and having a share capital.
Object Clause in Memorandum of Association of Company
A detailed list of activities to be performed by the Company after its incorporation is mentioned in the Object Clause of the Memorandum of Association. Activities to be performed by the Company included in the object clause consist of two parts:
- The main activity of the business, and
- The activities ancillary to the main activity of the business
The Company is prohibited from carrying on the business outside the scope of its objects.
Reasons to Amend Object Clause
The following can be the various reasons for which Company alter or amend its object clause:
- The Company may want to carry on its business on a larger scale by enhancing the scope of its activities.
- To attain the goals already set by the Company through new or improved methods.
- To carry on such additional business that can easily be combined with the existing business of the Company.
- To sell or dispose of the part of the business, which can alter the structure of the business.
- In case the Company is getting amalgamated or combined with other companies, it needs to expand its existing objective.
Contents of Memorandum of Association
MOA of the Company consists of the following clauses:
- Name Clause
This is the first clause in every MOA that shall mention the name of the Company with the last word as Private Limited, Limited, OPC Private Limited depending upon the type of Company. Such requirement needs not to be fulfilled by Section 8 Company.
- Registered Address Clause
It is the clause that mentions the name of the state where the Company's registered office is situated.
- Object Clause
It specifies the objects for which the Company is incorporated.
- Liability Clause
It specifies the limited or unlimited liability of the members.
- Capital Clause
This is the last clause that mentions the Capital of the Company. Authorized Capital divided into such shares shall be mentioned by the Company under this clause. Authorized Capital is the amount up to which the Company can raise the fund.
The Process to Amend Object Clause of Company's MOA
In case the Company wants to carry on the business which is not mentioned in its object clause, then it shall first get it amended to add the additional objects following the below-mentioned procedures:
- Call a Board Meeting
Issue a notice of Board Meeting seven days prior to the date of Board Meeting to all the Directors of the Company and attach agenda, notes of agenda/plan and draft resolution with the said notice.
- Hold the Board Meeting
- Hold a board meeting of the directors of the Company.
- Propose new objects to the directors of the Company in the meeting.
- After the selection of the appropriate object, pass a board resolution.
- Get approval from the directors to change the object and recommend the proposal to members.
- Fixing of date and time with the venue for the extraordinary general meeting and appointing a director for sending a notice of the same to other members.
Notice for the extraordinary general meeting should be given 21 days before the date fixed for the extraordinary general meeting. The notice should contain a statement of business to be taken care of in the extraordinary general meeting.
- Hold Extraordinary General Meeting
In EGM, the special resolution will be passed by shareholders/members for change in the object clause of the MOA.
Such resolution shall be passed by the three-fourth of the majority. In the case of listed companies, after passing the resolution, the Company shall send a copy of the resolution and its preceding details to the stock exchange where its shares are listed. Special Resolution shall be passed by Postal Ballot in the following cases of companies:
- A company with more than 200 members.
- A Company has such money which remains unutilized that was raised through the issue of prospectus.
- Filing and fees
After passing the special resolution, the Company should fill out the form MGT-14 for the submission of the resolution to the Registrar with the requisite fee within 30 days from the date of passing of the special resolution in the extraordinary general meeting. With the form, the following documents need to be submitted:
- A true certified copy of the said special resolution
- Copy of notice sent to the members
- Copy of amended MOA
- Copy of attendance sheet of the EGM.
- Issue of Certificate
After receiving the above-mentioned form, the Registrar will scrutinize the same and, after satisfaction, approves the amendment made in MOA and issue the registration certificate. Such certificate will be conclusive proof of the fact that the changes have been made in the object of the Company.
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Frequently Asked Questions
Following key-points to be remembered:
- Company is permitted to subscribe through an agent
- Minor cannot sign the subscription sheet in MOA and shall be signed by a guardian who is acting on his behalf.
- It is upon the discretion of the Company to add any further additional points other than those mentioned provisions.
In case the Company decides to alter its object clause is a Public Limited company, shall follow these additional points as well:
- Special Resolution passed shall be published in the newspaper (English & Vernacular language)
- Such a newspaper must be in wide circulation is that state where the registered office of the Company has to be situated.
- The Company shall also place such information relating to MOA alteration on its website.
- Dissenting shareholders who don't agree to the alteration of the Object clause shall be given an exit option.
A small restriction is imposed on those companies who have any unutilized amount of money raised through the issue of prospectus. Such Companies shall pass a special resolution before altering the object clause, and such resolution shall be published in one English newspaper and one in vernacular language newspaper.
Earlier object clause consisted of 5 clauses that are now deleted under Companies Act 2013. In new online form SPICe 33 for MOA, only two object clause persist, such as
- Main Objects; and
- Ancillary Objects.
New E-form 33 is an online SPICe form for MOA which is filed while incorporating the Company along with SPICe 32 and SPICe 34. Thus the Company needs not to file this online form again with form MGT-14 for authentication of alteration. Attaching a physical copy of MOA with MGT-14 will be sufficient.