The Memorandum of Association (MOA) defines the corporate charter of a firm. This legal instrument is prepared at the time of the creation and the registration process of a corporation to clarify the relationship between shareholders and it outlines the goals of the business for which it was established.
The company is able to carry out only those actions that are specified within the MOA. In this article, we have specified the objectives of the Memorandum of Association that defines the boundaries beyond which the activities of the business cannot be carried out.
Objectives of Memorandum Of Association
A business can only engage in the activities mentioned within the MOA. Also, the Memorandum of Association lays down the limits that the activities of the company are not allowed to go over.
MOA assists shareholders, creditors, and all other people who interact with the business and understand the capabilities and goals of the business. Additionally, MOA content helps the prospective shareholders to make the right choice when investing in the business.
Importance of Memorandum Of Association
The essential objectives of the Memorandum of association are one of the most fundamental documents for a company that is the basis upon which the business is formed.
This document is essential for these reasons:
- The memorandum sets out the limits on the authority of the company created pursuant to the Act.
- The entire organization’s structure is built on a memorandum.
- It describes the scope of activities carried out by the company. The investors know where their funds will be used while outsiders know what kind of work the company is allowed to engage in.
- It is the most fundamental document for the company regarding its legal framework.
- It is a document that is the charter of the company that sets out its goals in writing.
Steps to Change the Objectives of Memorandum of Association
- First, the notice needs to be published for calling the Board Meeting.
- The second is the notice to call a general meeting should be distributed by the business to each of the directors, auditors, and members. The notice must be approved by the Board.
- Extraordinary general meeting is scheduled for the due date as stated in the notice to adopt a special resolution in Section 13 (1) of the Companies Act, 2013.
- A certified copy of the special resolution on corporate letterhead with the required documents must be filed. This is required to allow for alteration of MOA.
A certified copy of the special resolution should also be submitted to the registrar of companies with form MGT14 within 30 days of the date of the passing of the special resolution.
The documents required for the Objectives of Memorandum of Association to be filed along with an official copy of the special resolution on a letterhead of a company are as follows:
- Notice of the call for an extraordinary general meeting
- Modified MOA with the modified object clause
Contents of Memorandum of Association
The Memorandum of Association is a constitutional document of the business that aids in bringing about changes in business activities.
It is comprised of five clauses that are listed below:
- Name Clause:- It gives details about the business. By determining its name, and the business it is possible to determine whether it’s either a public or private limited company.
- Registered office clause – It indicates the state the company was incorporated.
- Object clause – In this clause comes the “object” which reveals the mission of the company.
- The liability clause – Outlines the responsibility of the employees of the corporation. It may be restricted by guarantees or shares.
- Capital clause – Companies with share capital will list the total capital authorized, which is then divided into shares and the sum.
- Nominee clause – Nominee clause is a provision that is only applicable to One Person Companies (OPCs). The clause specifies the name of the individual who will become the member of the company in the event of the subscriber’s death. The subscriber and the nominee must both be Indian citizens and residents of India.
Therefore, the company must adhere to the procedures as stipulated in law to alter the way business is conducted in the company. To do this, the business requires the approval of shareholders through a resolution.
Alteration of MOA
The company, after getting acceptance from the MCA has to modify each version that is part of the Memorandum of Association.
The company may begin new business operations after receiving the approval of the MCA. Make sure you comply with all rules and regulations in order to avoid penalties.
The company is required to update MCA by filing the forms at intervals as and as needed, for example changing the registered office business activities and capital expenditures. If not, the company, along with officers who are in default are liable for the fine.
A Memorandum of Association is a crucial document that is required during the process of forming a company. The MOA outlines the firm’s relationship with stockholders and outlines the purposes for which it was established. It serves as the corporation’s charter and outlines the complete organizational structure with great precision.
If you’re still having questions regarding the objectives of the Memorandum Of Association, or any other question, we are ODINT Consultancy. We’re we are here to assist you at each step of your way.
The process of altering the MOA of the business is a difficult and long-winded procedure. It is important to use proper care when executing the procedure.
Object Clause of Memorandum of Association of a Company may be modified by an additional resolution, and also observing other requirements.
Objects of the company the purpose of which the company is planned to incorporate, and any other matter that is considered to be necessary for connection with them.
The MOA has a number of clauses, including the name clause, capital clause, liability clause, registered office clause, and object clause.
- It outlines the firm’s connection with investors and the goals for which it was established.
- The MoA establishes the limits that the firm’s actions are not permitted to cross.
- The provisions mentioned in the MOA give full information about the firm’s promoters.