An Indispensable Tool For A Company in Making

An Indispensable Tool for a company in
making
Everything you need to know about memorandum of Association
By Dhruv Kalia
What does Memorandum of Association stand for
A legal document known as the Memorandum of Association outlines the reason the firm was
founded. It outlines the company's authority and the circumstances under which it must
function. It is a document that outlines all the guidelines that direct how a business interacts
with the outside world.
Every firm must have a Memorandum of Agreement that outlines the parameters of its
operations. Once created, the document has no other uses for the business. The action will be
regarded as ultra vires and so void if the firm exceeds the scope. It serves as the foundation
for the business. The Memorandum of Agreement specifies the company's whole
organisational structure.
Object of an MOA
An important document that provides all of the information about the company is the
Memorandum of Association. It controls how the corporation interacts with its stakeholders.
The Companies Act of 2013's Section 3 explains the significance of memoranda by noting
that, in order to form a business,
 Seven or more employees are needed for a public firm
 two or more employees are needed for a private company
 only one employee is needed for a one-person business.
In each of the aforementioned scenarios, before registering the company with the Registrar,
the parties involved should first sign a memorandum.
Thus, a Memorandum of Association is necessary for the registration of a corporation.
According to Section 7(1)(a) of the Act, the company's Memorandum of Association and
Articles of Association must be properly signed by the subscribers and filed with the
Registrar in order for the company to be incorporated. A memorandum has other things in
addition to these. which are-
It enables shareholders to learn more about the business before purchasing shares. This aids
the shareholders in deciding how much money they will put into the business. All interested
parties that wish to cooperate with the business in any way are given information.
The Clauses: Tools to make a MOA constructive
Name Clause
The company name is stated in the first clause. The company name may be anything.
Nonetheless, there are several requirements that must be met.
According to Clause 4(1)(a):
A firm's name should include the word "Limited" if it is a public company. For instance,
"Robotics," a public business, will have the name "Robotics Limited" as its registered name.
A firm's name should include "Private Limited" if it is a private company. Its legal name will
be "Safe Private Limited," a private firm.
Section 8 companies are not subject to this stipulation.
Section 8 Company is named after Section 8 of the Companies Act,2013. It describes
companies which are established to promote commerce, art, sports, education, research,
social welfare, religion etc. Section 8 companies are similar to Trust and Societies but they
have a better recognition and legal standing than Trust and Societies.
Registration Office Clause

The country of origin and judicial jurisdiction of a company are determined by its registered
office. It serves as a dwelling and the hub for all communications with the business.
The Registered Office of the Company is discussed in Section 12 of the Companies Act,
2013.
It is sufficient to identify the state where the company is located before the company is
incorporated. Nonetheless, the company must declare the precise location of the registered
office after incorporation. Within 30 days of establishment, the business must also verify its
location.
Every business must display its name and registered office address outside of each location
where it conducts business.
Object clause
Section 4(c) of the Act, details the object clause.The Object Clause is the most important
clause of Memorandum of Association. It states the purpose for which the company is
formed. The object clause contains both, the main objects and matters which are necessary
for achieving the stated objects also known as incidental or ancillary objects. The stated
objects must be well defined and lawful according to Section 6(b) of the Companies Act,
2013.
Liability Clause
The Responsibility Clause shields the shareholders from personal liability for the company's
losses, so offering them legal protection.
Two categories of limited liability exist:
Limited By Shares - A company limited by shares is what the Companies Act of 2013
(section 2(22)) defines. The sole cost incurred by shareholders in a corporation limited by
shares is the cost of the shares they have subscribed for. Their liability will only extend to the
unpaid amount if, for any reason, they did not pay the full amount for the shares and the firm
fails.
Limited By Guarantee – It is defined in Section 2(21) of the Companies Act, 2013.A
company limited by guarantee has members instead of shareholders. These members
undertake to contribute to the assets of the company at the time of winding up. The members
give guarantee of a fixed amount that they will be liable for. Non-profit Organizations and
other charities usually have a structure of companies limited by guarantee.
Capital Clause
It details the company's entire share capital as well as its share structure. how many shares of
what type are issued from the total amount of capital. The shares may be preference shares or
equity shares.
Example: The company has 80,000 rupees worth of shares, each worth 4000 rupees, divided
into 3000 shares.
Subscription clause
Who is signing the memorandum is stated in the Subscription Clause. Each subscriber must
specify how many shares he is purchasing. The memorandum must be signed by the
subscribers in the presence of two witnesses. A minimum of one share must be purchased by
each subscriber.
Association Clause
The memorandum's signatories express their desire to affiliate with the business and form an
association in this section.
Alteration, Amendment & Change in Memorandum of Association under Companies

Act, 2013.
According to Section 2(3) of the Act, a "alter" or "alteration" is any additions, deletions, or
substitutes. Only changes allowed by the Act may be made to the memorandum by the
corporation. By adopting a special resolution, the firm can change the provisions of the
memorandum in accordance with Section 13.
A formal decision made at a meeting is called a resolution. Resolutions might be either
ordinary or exceptional. A special resolution is one that needs at least a two-thirds vote to
pass in order to be valid. The Central Government must also give its written consent in order
to modify the terms.
There are several reasons why a memorandum might change. The modification is allowable
if,
1. Enables the company to carry its business more effectively;

2. Helps to achieve the objectives;
3. Helps the company to amalgamate with another company;
4. Helps the company dispose off any undertaking
Conclusion
As a result, the Memorandum of Association is a crucial document for the creation of a

corporation. It is stated in the company's charter. An organisation cannot be incorporated
without a memorandum. The Memorandum and Articles of Organization combined make up
the company's constitution.

An Indispensable Tool For A Company in Making

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An Indispensable Tool For A Company in Making

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An Indispensable Tool for a company in

Registration Office Clause

Alteration, Amendment & Change in Memorandum of Association under Companies

1. Enables the company to carry its business more effectively;

As a result, the Memorandum of Association is a crucial document for the creation of a

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