The Contents of a Memorandum of Association (MOA)

The Contents of a Memorandum of Association (MOA) 1

Memorandum of Association is an important document which states the objectives for which a company is formed. “The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company, to know what its permitted range of enterprise is,” defined according to Lord Macmillan. The Memorandum of Association also known as the charter of the company states the rights, privileges and powers of the company.

Memorandum of Association must be as detailed as possible as a company cannot undertake or perform any business or activity that is not stated in the memorandum. The memorandum contains the fundamental conditions upon which alone the company is allowed to be incorporated.

Since a company can only exercise those powers which are clearly stated in the Memorandum, it is important to know the contents of the Memorandum of Association. In line with the Companies Act, the Memorandum of Association of a company must contain the following clauses:

  1. The Name Clause: The Name of the Company:

It is important for a company to have a name in order to be identifiable; the company’s name is its identity. A company should not use a name that the similar to an already registered company, words like King, Queen, Emperor, Government Bodies and names of World Bodies like U.N.O., W.H.O., World Bank etc should not be contained in a company’s name. For a Public Limited Company, the name of the company should end with the word ‘Limited’ while a Private Limited Company, the name should end with the words ‘Private Limited’.

Also read: The Contents of an Articles of Association

  • The Registered Office of the Company – Registered Office Clause or Situation Clause:

This particular clause states where the registered company is situated, it is important to state where the registered office is situated. It is not compulsory to state the actual address, you can mention the state in which the registered company is situated. Note that if there is a change in the registered office, the – Registered Office Clause of the Memorandum of Association has to be updated accordingly.

  • The Objects of the Company – The Object Clause:

As mentioned above that a company can only exercise those powers which are clearly stated in the Memorandum, the object clause is an important aspect of the Memorandum of Association. This should contain the objects for which the company is formed and also determines the extent of the powers which the company can exercise in order to achieve the object or objects. The Memorandum of Association is not just a mere legal document; it is a guide to practicality of business activities.

The object clause must contain the main object and other objects that are not stated in the main object.

  • The Liability of Shareholders – The Liability Clause:

This clause states the liability of the members of the company. This clause is dependent on is the company is limited by shares or guarantee which will detail the amount each member is liable for in the event that the company winds up.

  • The Capital Clause:

The share capital and the maximum amount of capital that can be raised are stated in this clause, and how the capital is divided into shares. This clause should also state the right and privileges of shareholders. Unlimited companies do not need to state the capital clause in its Memorandum of Association.

  • The Association or Subscription Clause:

This clause has the declaration of Association that is made by the signatories. It contains the names and addresses of the first set of subscribers. Minimum number for members of private company is two and 7 for a public company.

The Memorandum of Association can be regarded as the foundation of the company, the constitution that guides the affairs of the company. It also determines the relationship between the outsiders and the company.