Introduction

In this article you will know about the "Memorandum Of Association In Company Law". The preparation of a memorandum Of association is the first step in the formation of a company. Memorandum of Association is the main document of the company which defines its objects and lays down the fundamental conditions upon which the company is allowed to be formed. It is the unalterable charter or Constitution of the company. 
According to section 2(56) of the Companies Act 2013 ,"Memorandum means Memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this act".
According to palmer, Memorandum specifies the objects for which the company is formed and enables outsiders dealing with the company to know whether the contractual relation in which they intend to enter with the company is within the objects of the company. Any act which is beyond the powers of the company is" ultra vires" and hence void. 




Format Of Memorandum Of Association ( section 4) 

According to section 4 of the Companies Act 2013, Memorandum of a company shall be drawn in such form and manner as given in the following Tables Of Schedule 1 of the Companies Act 2013.

Table A contains a form of Memorandum of a company limited by shares. 

Table B contains a form of Memorandum of a company limited by guarantee and not having share capital. 

Table C contains a form of Memorandum of a company limited by guarantee and having share capital. 

Table D contains a form of Memorandum of an unlimited company. 

Table E contains a form of Memorandum of an unlimited company and having share capital. 

The Memorandum Of Association of a company shall be 
(a) Printed, 
(b) divided into paragraphs, 
(c) numbered consecutively, and 
(d) signed by a prescribed number of subscribers ( at least 7 in case of public company, 2 in case of private company and 1 in case of One Person Company ). Each subscriber must sign and mention his/her address, description and occupation in the presence of at least one witness who shall attest the signatures and shall provide his particulars. 



Contents Of Memorandum Of Association ( Section 4) 

1. Name clause 

Since a company is a distinct legal entity it must have its own name. The name of a public company must end with the words 'Limited' and that of a private company with the words ' Private Linited' and ' One Person Company' in case of OPC. A company can be with any name subject. The name of the company should not be undesirable and similar to the name of an existing company or LLP. It must indicate its principal objects and it should not violate the provisions of the Emblems and Names ( prevention Of Improver Use) Act 1950.

2. Registered Office/ Domicile/Situation Clause 

Memorandum of Association must state the name of the state in which the registered office of the company is to be situated Section 4(1). This will important for two reasons:-
(i) It will fix the domicile of the company which determines the jurisdiction of the High Court of the State in which the registered office is situated. 
(ii) It is at the registered office where the statutory books and other documents of the company shall be kept. 
Every company must have its registered office within 15 days of its incorporation. Further, the company must get its registered office verified by the registrar by filling form INC 22 within 30 days of its incorporation. 

3. Object clause 

This is the most important clause in the memorandum because it not only shows the objects for which the company is formed but also determines the extent of the powers which the company can exercise in order to achieve those objects. Stating the objects of the company in the Memorandum of Association is not a mere legal technicality but it is a necessity of great practical importance. This is because it provides protection to shareholders and investors as they know the purpose for which their money is being employed. 

4.Capital Clause 

As per section 4 (1) , in case of company limited by shares, the memorandum must state - 
(i) The amount of share capital with which the company is to be registered and division there of into shares of a fixed amount. The capital with which the company is registered is called the authorized or nominal share capital.
(ii) The number of shares which each subscriber intends to take, which shall not be less than one. 
(iii) In this case of OPC which shall become the member of the company in case of death of the subscriber. 

5. Liability Clause 

The liability clause states the nature of liability of the members of the company Section 4(1).
In case of a company limited by shares, the liability of members is limited to the amount unpaid, if any, on the shares held by them. 
In case of a company limited by guarantee, the liability of members is limited to -
  • The amount that each member has undertaken to contribute to the assets of the company in the event of winding up while he is a member or within one year after he ceases to be a member, for payment of debts and liabilities of the company; and 
  • The amount of cost and expenses of winding up and for adjustments of rights of the contributories among themselves. 

6. Association Or Subscription Clause 

As per section 3 of the Companies Act 2013 , the memorandum of every company must end with an Association Or Subscription clauses. It contains the declaration by the subscribers that they desire to be formed into a company and agree to take shares stated against their names. No subscriber will take less than one share. The memorandum has to be subscribed to by attested even persons in the case of a public company and by at least two persons in the case of a private company. The signature of each subscriber must be attested by at least one witness who cannot be any of the subscribers. 


Conclusion 

In conclusion, the Memorandum of Association (MOA) is a legal document that plays an important role in the formation of a company. It is a charter of the  company. Without memorandum of association company cannot be incorporated. It outlines the objectives, activities and limitations of the company and helps in establishment of the the company as seperate legal entity. Both memorandum of association and article of association together form the Constitution of the company. 


Frequently Ask Questions

Question 1: what is MOA? 

MOA full form is Memorandum Of Association. It is a legal document that contains all the essential details about the company. It explain the terms, objectives, activities of the company. Without memorandum of association company cannot operated. 

Question 2: what are the objectives of Memorandum of Association? 

Memorandum of Association is a legal document that every company need to prepared. It provide legal status and identity to the company and make company seperate from its owners or shareholders. 

Question 3: what is the difference between Memorandum of Association and Article of Association? 

Both Memorandum of association and Article of association is an important document for a company. Memorandum of association contains all the essential and legal details of the company, while Article of association describe all the rules and regulations designed by the company. 

Question 4: who prepares Memorandum of association and Article of association? 

The MOA and AOA , both are essential documents for the company that are the basis of the company's Constitution. The founders of the company need to draft the Memorandum of association and Article of association. 

Question 5: what is the clause of Memorandum of association? 

It has six fundamental clauses, namely- Name clause, Domicile clause, Object clause, Liability clause, Capital clause, and Subscription clause.