The MOA and AOA: What you need to know about these documents

MOA and AOA (Memorandum of Association and Articles of Association) 

What is a Memorandum of Association (MOA)?

The Memorandum of Association (MOA) is a foundational document for companies that defines their purpose and scope of operations. It is filed with the Registrar of Companies at the time of incorporation and is a public document.

The MOA must contain six clauses, which are:

Name Clause:

This clause specifies the name of the company, which must end with either “Limited” or “Private Limited”. In the case of a One Person Company (OPC), the word “One Person Company” must be written within brackets after the name.

Registered Office Clause: 

This clause specifies the name of the State in which the Registered Office of the company is situated. This clause is also known as the “situation clause”. The State of the Registered Office is required to determine the jurisdiction of the Local Government, Office of the Registrar, and Stamp duty calculations.

Objects Clause: 

This clause specifies the objects of the company for which the company is proposed to be incorporated. There cannot be an “other objects” clause under this Act, as it was in the earlier Act. However, a company may have more than one object as its main objects.

Liability Clause: 

This clause specifies the liability of the members, whether limited or unlimited, and its extent. In the case of a company limited by shares, the liability of the members is limited to the amount unpaid, if any, on the shares held by them. In the case of a company limited by guarantee, the extent of liability is defined as the amount up to which each member undertakes to contribute in the event of winding up.

Capital Clause: 

This clause specifies the authorized share capital of the company and its division in number and amount. It also specifies the number of shares agreed to be subscribed by the subscribers to the Memorandum opposite their name. There is no requirement to have minimum paid-up capital as per the amendment made in clause (68) and (71) of Section 2 (definition of “Private Company” and “Public Company” respectively) by Section 2 of the Companies (Amendment) Act, 2015.

Subscription Clause: 

This clause specifies the name of the person, address, occupation, and number of shares which the person agrees to take. In the case of a company limited by guarantee, this clause simply states the name of the person, address, and occupation. The subscribers may be natural persons or legal persons. The subscribers may jointly subscribe to the Memorandum. The signing by person is to be witnessed. The manner of signing is dealt with in detailed manner in the latter part. This is the only clause of the Memorandum which is a static clause i.e. it harkens back to the date of subscription and cannot be amended.

Nominee Clause: 

In the case of an OPC, this clause specifies the name of the nominee. The subscriber and nominee, in the case of an OPC, shall be individual. This position is further clarified in Rule 3(1).

The MOA is an important document for companies because it defines their legal identity and limits their activities. It is also a valuable resource for shareholders, creditors, and other stakeholders who need to understand the company’s purpose and scope of operations.

What is an Articles of Association (AOA)?

Articles of Association (AOA) are the internal rules and regulations of a company. They define the company’s management structure, the rights and responsibilities of its members, and the procedures for conducting its business.

The AOA is a public document that must be filed with the Registrar of Companies at the time of incorporation. It can be amended by the company’s shareholders, but any amendments must be approved by the Registrar.

The AOA is an important document for companies because it defines how the company is to be managed and how its members interact with the company. It is also a valuable resource for shareholders, creditors, and other stakeholders who need to understand the company’s internal affairs.

Definition of “Articles”

The definition of “Articles” in the Companies Act, 2013 states that it refers to the articles of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act.

The AOA is an essential document because it provides a framework for the company’s operations. It also helps to protect the interests of the company’s members and stakeholders.

The AOA can be tailored to the specific needs of the company. It may include provisions on the following topics:

Management of the company: 

The AOA specifies how the company is to be managed, including the powers of the board of directors and the shareholders.

Relationship between the company and its members:

 The AOA defines the rights and obligations of the company’s members, such as their voting rights and their right to receive dividends.

Other matters: 

The AOA may also include provisions on other matters, such as the company’s name, its registered office, and its authorized share capital.

The MOA is a public document, while the AOA is a private document. This means that the MOA is available for public inspection, while the AOA is not.

The MOA is the more important document of the two, as it defines the company’s legal identity and limits its activities. The AOA, on the other hand, is more important for the day-to-day management of the company.

The Memorandum of Association and Articles of Association (MOA and AOA) are two essential documents for companies. By understanding these documents, you can better understand the legal framework of your company and how it operates.