Memorandum of Association – MoA Format

A group of people come together to form a company to achieve a specific purpose. A

company is usually established to earn profits and is commercial in nature. An
application must be filed with the Registrar of Companies (ROC) along with certain
documents to register a company. One crucial document required to be submitted to
the ROC while applying for registration is the company’s Memorandum of
Association (MoA).

What is MoA?

A Memorandum of Association (MoA) represents the charter of the company. It

is a legal document prepared during a company's formation and registration process.
It defines the company's relationship with shareholders and specifies the
objectives for which the company has been formed. The company can undertake only
those activities mentioned in the Memorandum of Association.

As such, the MoA lays down the boundary beyond which the company’s actions
cannot go. When the company's actions are beyond the boundary of the MoA, such
actions will be considered ultra vires and thus void. The MoA is a foundation upon
which the company is established. The company's entire structure is written down in
a detailed manner in the MoA.

The Memorandum of Association is a public document. Any person can get the
MoA of the company by paying the prescribed fees to the ROC. Thus, it helps the
shareholders, creditors and any other person dealing with the company to know the
basic rights and powers of the company before entering into a contract with it. Also,
the contents of the MoA help by the prospective shareholders make the right decision
while considering investing in the company. MoA must be signed by at least
2 subscribers in the case of a private limited company and 7 members in the case of a
public limited company.

Format of Memorandum of Association

Section 4(6) of the Companies Act, 2013 (‘Act’) states that the format of an MoA
will be as specified in Table A to Table E of Schedule 1 of the Act. Every company
needs to select the appropriate format provided in Table A to E depending on its
business type. The different formats provided in Act are as follows:

Table A – It is applicable to companies with a share capital.

Table B – It is applicable to a company limited by guarantee but does not have a

share capital.

Table C – It is applicable to a company limited by guarantee having a share capital.

Table D – It is applicable to an unlimited company but does not have a share capital.

Table E – It is applicable to an unlimited company with a share capital.

The MoA should be numbered, printed and divided into paragraphs. The subscribers
of the company must sign the MoA.
Objectives in Registering MOA

The Memorandum of Association is a necessary document that includes the

company’s crucial information. Section 3 of the Act states that the company can be
formed when the following members subscribe to the memorandum:

 Seven or more members in the case of a public company.

 Two or more members in the case of a private company.
 Only one member in the case of a One Person Company (OPC).

A company can be registered only when the MoA is drafted and it is

signed/subscribed by the minimum numbers as provided above. Thus, the MoA of all
companies is required for company registration.

Section 7(1)(a) of the Act further provides that a company’s Memorandum of

Association and Articles of Association (AoA) must be duly signed by the
subscribers for the company to be registered with the ROC. The MoA copy should be
given to the ROC while applying for company registration. The ROC can provide the
certified copy of the MoA to the public upon payment of the prescribed fees. It helps
shareholders in the following ways:

 Allowing shareholders to know about the company before buying its

shares and determine the capital they can invest in the company.
 Provide all company information to stakeholders willing to associate with
it.
What are Main Clauses of the Memorandum of Association?

The following are the clauses in Memorandum of Association:

 Name Clause
 Registered Office Clause
 Object Clause
 Liability Clause
 Capital Clause

Contents of Memorandum of Association

The memorandum of association clauses/contents are as follows:

1. Name Clause:

This clause specifies the name of the company. The name of the company should not
be identical to any existing company. Also, if it is a private company, then it should
have the word ‘Private Limited’ at the end. In the case of a public company, then it
should add the word “Limited” at the end of its name. For example, ABC Private
Limited in the case of the private, and ABC Ltd for a public company. The name
should be in compliance with the provisions laid down in the Companies Act and
Rules.
2. Registered Office Clause:

This clause specifies the name of the State in which the registered office of the
company is situated. It helps to determine the jurisdiction of the Registrar of
Companies. The company must inform the registered office location and address to
the Registrar of Companies within 30 days from the date of incorporation or
commencement of the company. The registered office is the official office of the
company. All communications, legal notices and documents will be sent to the
registered office address.

3. Object Clause:

This clause states the objective with which the company is formed. The company
must carry out its business activities to fulfill the objectives mentioned in this clause.
It helps to protect the interests of the stakeholders since the company must operate
within the scope of its object clause and should not engage in any activities not
specified in this clause. The objectives can be further divided into the following 3
subcategories:

 Main Objective: It states the main business of the company

 Incidental Objective: These are the objects ancillary to the attainment of
main objects of the company
 Other objectives: Any other objects which the company may pursue and
are not covered in above (a) and (b)

4. Liability Clause:
It states the nature of liability of the members of the company in case of any loss or
debts incurred by it. In the case of an unlimited company, the liability of the
members is unlimited. Whereas, in the case of a company limited by shares, the
liability of the members is restricted by the amount unpaid on their share. For a
company limited by guarantee, the liability of the members is restricted by the
amount each member has agreed to contribute.

5. Capital Clause:

This clause details the maximum capital a company can raise, also called the
authorized/nominal capital of the company. It provides the maximum amount of
capital that can be issued to the company shareholders. It also explains the division of
such capital amount into the number of shares of a fixed amount each. It should also
specify the type of shares the company is authorised to issue, i.e. equity shares,
preference shares, or debentures.

Alteration of MoA

If there are any changes in the clauses of the MoA, the MoA must be altered or
amended to include the changes. The following changes will lead to the alteration of
the MoA:

 Change in the company name

 Change in location of the registered office
 Change in company objects
 Change in the nature of liability of company members
 Change in the maximum limit of authorised capital of the company or
division of authorised capital

The process of alteration of the MoA is as follows:

 Hold board meeting: The company must hold a board meeting to

approve the alterations to the MOA.
 Hold a general meeting: A general meeting should be conducted to
obtain the approval of the shareholders for the alterations to the MOA.
 Filing of a special resolution: A special resolution to alter the MoA
should be filed with the ROC within 30 days of the passing of the resolution.
 Approval of ROC: The ROC will scrutinise the special resolution and
approve the MoA alteration.
Articles of Association Content
As is evident, an Articles of Association must contain all the information
regarding who holds the power distribution among directors, officers,
shareholders etc, who holds right of vote and veto, the nature and form in which
the primary business of the company is to be carried out, the structure for the
internal corporate governance of the company, the means of internal review by
which executive decisions are made, the bodies in whom authority to make such
decisions in the last resort finally rest, the procedure and number or percentage of
votes required to establish a majority and make some key decisions etc. Besides
this the rights and duties of the members of the company, their names and
number, as well as other details relating to the contributed share capital are
included.

Details included in AOA

If a company’s constitution contains any restrictions on the objects at all, those
restrictions will form part of the articles of association. The Articles of
Association also include, among other details:

 valuation of intellectual rights, say, the valuations of the IPR of one partner
and, in a similar way as how we value real estate of another partner
 the appointments of directors – which shows whether a shareholder
dominates or shares equality with all contributors
 directors meetings – the quorum and percentage of vote
 management decisions – whether the board manages or a founder
 transferability of shares – assignment rights of the founders or other
members of the company do
 special voting rights of a Chairman, and his/her mode of election
 the dividend policy – a percentage of profits to be declared when there is
profit or otherwise
  winding up – the conditions, notice to members
 confidentiality of know-how and the founders’ agreement and penalties for
disclosure
 first right of refusal – purchase rights and counter-bid by a founder
A company’s memorandum of association, by contrast, contains an objects
clause, which limits its capacity to act. The objects clause in general is drafted in
such a wide and somewhat ambiguous way as not to restrict the board of directors
in their day to day activities, especially if the business intends to gradually
broaden its scale of operation. Nonetheless, any significant change (for e.g.
operating in a completely different industry than registered in) in this clause
requires a separate application.