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Memorandum of Association (MOA) of Private Limited Company

What is Memorandum of Association?

MOA Full Form is a Memorandum of Association (MOA). Memorandum of Association is the main document of a company which defines its objects. It lays down the fundamental conditions upon which alone the company is allowed to be formed. It may be termed as the charter or the constitution of the company since it governs the relationship of the company with outside world.

According to Section 2(56) of Companies Act, Memorandum means “Memorandum of Association as originally framed or as altered from time to time in pursue of any previous companies law or of this Act”. In simpler words, the MOA tables is the base on which a company relies on.

Purpose of Memorandum of Association

A Memorandum of Association serves two important purposes:

i) It enables the intending shareholder to know the field of activity or to what purpose his money is going to be used by the company, and what risk he is taking in making the investment.

ii) Similarly, anyone who is dealing with the company, for example, the supplier of goods or money, will know whether the transaction he intends to make with the company is within the objects of the company, and not ultra vires its objects.

Memorandum of Association is a public document, therefore, every person who deals with the company is presumed to have sufficient knowledge of its contents. It is open for public inspection.

Clauses of Memorandum of Association 

Memorandum must have the following clauses:

1.Name Clause

The name of the company should be stated in this clause. A company name should not be identical in any manner to any existing company. There are some words which are strictly prohibited to be used in names of company in any manner. The Word “Private/PVT Limited” should be in end of any private company. And the word “Limited” should be in the end of every public limited Company.

An section 8 or not for profit company are not required to use the word “Private Limited/ pvt. Limited or Limited” at the end of their company name.

2. Situation Clause

The Memorandum of Association must mention the State in which the registered office of the company will be located. The domicile of the company should be stated for the determination of jurisdiction of the Court, as well as of the Registrar. Within a particular domicile, there must be a registered office, intimation of which must be given either at the time of registration of within 30 days from the date of registration provided the company does not commence business earlier than this period of 30 days.

3. Objects Clause

Any number of lawful objects can be stated and included in this objects clause, whether the company engages in all those activities or not. From legal view-point, this clause is ascribed the highest importance.

Any activity which offends the objects clause and is not expressly stated in the Memorandum of Association would be considered ultra vires, i.e beyond the powers of the company.

4. Liability Clause

It states the liability of the members of the company. In case of an unlimited company, the liability of the members is unlimited. And in case of a company limited by shares, the liability is restricted by the amount unpaid on their share. For a company limited by guarantee, the liability is restricted by the amount each member has agreed to contribute.

5. Capital Clause

Memorandum of Association of a limited company having share capital (i.e. company limited by shares or company limited by guarantee having share capital) must also state the amount of share capital with which the company is to be registered which is usually called authorized or nominal capital.

Further, division of registered share capital into shares of a fixed amount is also required to be given in the memorandum. Each subscriber must take at least one share and write opposite his name the number of shares he takes.

6. Association Clause or Subscription Clause

An association clause signify the desire of subscribers to form themselves into a body corporate. The subscription clause provides that each subscriber is to take at least one share in the company and is required to state the number of shares taken by him along with his signature.

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Note: This Post was last updated on November 25, 2022

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