What is MOA? Meaning and Importance of Memorandum of Association

Memorandum of Association is the foundation of a company. The meaning of Memorandum of Association is important for anyone who wants to understand how a company is formed & managed. The document sets the scope, purpose & legal standing of a company.

Today, In this article we will understand about the Memorandum of Association on Filesure.

Meaning of Memorandum of Association

The Memorandum of Association defines the constitution & limits of a company. The Companies Act 2013 makes it compulsory for every company to prepare & file an MOA. The document includes the company name, registered office, business purpose, share capital & member liability.

The purpose of Memorandum of Association is to inform shareholders, creditors & the public about the company activities. The document acts as the company charter & serves as a foundation for its operations.

What is the Importance of MOA?

The importance of MOA is very high. The MOA becomes a public document once the company is formed & anyone can inspect it. The document builds trust between the company & its stakeholders.

The key reasons why MOA is important are given below:

The document limits the company scope. The company can only do activities mentioned in the objects clause. Any act beyond that is called ultra vires or beyond its power.
The MOA builds trust by making company details public. The stakeholders can check what the company is allowed to do.
The document defines rights & liabilities. The MOA clearly shows if the liability of members is limited or unlimited & the amount of share capital.
The MOA forms the base for corporate governance. The company governance starts from the MOA & continues through its Articles of Association.

What are the Contents of Memorandum of Association?

The contents of Memorandum of Association are fixed under the Companies Act 2013. The law says every MOA must include specific clauses.

Clause Name	What it Contains
Name Clause	The company name with its type such as Limited or Private Limited.
Registered Office Clause	The state where the company office is located.
Object Clause	The main & related objectives of the company.
Liability Clause	The details about liability of members as limited or unlimited.
Capital Clause	The total share capital, number of shares & their values.
Association or Subscription Clause	The declaration by subscribers to form the company & take shares.

The companies can add more clauses if needed. The law provides different formats for different company types such as limited by shares or by guarantee. The correct format must be used during company formation.

Types of Clauses in MOA & How to Draft a Memorandum of Association

The types of clauses in MOA are divided as per the law. The MOA definition under Companies Act 2013 explains how these clauses should be framed.

The way to draft a Memorandum of Association is explained below:

The drafter must choose the right format from Schedule I based on company type.
The company name must follow rules & must end with Private Limited or Limited.
The object clause should be simple & clear. The broad or unclear language must be avoided.
The capital & liability clauses should match the company type.
The subscribers must sign the document & it should be properly numbered & printed.
The final MOA must be filed with the Registrar of Companies along with other papers.

What is the Difference between MOA and AOA?

The MOA vs AOA explained section helps people understand why both documents are required.
The MOA shows the external rules of the company & the AOA defines the internal rules.
The Memorandum of Association deals with the core structure such as company name, capital, liability & its relationship with outside parties.
The Articles of Association manage internal matters like shareholder rights, director powers & meeting rules. The MOA has higher importance because it sets the limits for company actions.

Legal Provisions of Memorandum of Association

The legal provisions of Memorandum of Association come from the Companies Act 2013. The Act states that every company must prepare the MOA as per Schedule I. The Act also gives rules for altering the MOA such as changing the company name, capital or object clause.

The document becomes a public record after registration. The company cannot act beyond its MOA because such actions will be invalid. The law ensures every company stays within its legal limits & protects shareholders & the public.

What is Memorandum of Association Format in India?

The Memorandum of Association format in India is given in Schedule I of the Companies Act 2013. The Schedule provides five formats from Table A to E. The company must select the correct one based on its type. Table A applies to companies limited by shares, Table B to companies limited by guarantee without share capital, Table C to companies limited by guarantee with share capital, Table D to unlimited companies & Table E to unlimited companies with share capital. The company must use the correct table for compliance.

Conclusion

At Last, we can conclude that Memorandum of Association is the main base of a company structure. The meaning of Memorandum of Association & the importance of MOA show how vital this document is for every business. The MOA defines the rights, powers & boundaries of a company. The company's future depends on how well its MOA is written & understood. The MOA ensures the company works lawfully & builds trust with all who deal with it.

Also Read: Why Every Director In India Must Complete Director Kyc On Time

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