Memorandum of Association (MOA): Clauses, Doctrines and Alteration Procedure under Companies Act

Summary: The Memorandum of Association (MOA) is a foundational constitutional document of a company that establishes its identity, objects, registered-office jurisdiction, liability structure, capital provisions and subscription particulars. Often described as the charter of a company, the MOA defines the essential framework within which the company is incorporated and conducts its activities. This article examines the importance of the MOA under the Companies Act, 2013, particularly Section 4, and explains the name, registered-office, object, liability, capital and subscriber clauses. It also discusses major principles of corporate jurisprudence, including separate legal personality, lifting of the corporate veil, ultra vires, indoor management and constructive notice. These doctrines help explain the relationship between a company, its members, management and persons dealing with it. The article further examines the process of altering the MOA through corporate approvals, general meetings, resolutions and filings with the Registrar of Companies. Particular attention is given to changes in company name, registered office, objects and share capital, including forms such as MGT-14, INC-24, INC-22 and related filings. As different alterations involve distinct statutory requirements, approvals and procedures, companies must examine the applicable provisions before undertaking amendments. A properly drafted and maintained MOA supports legal compliance, corporate transparency and informed decision-making by investors and other stakeholders.

The charter of a company: definition and precise understanding of MOA

Introduction:

Every person residing in different part of the world have unique identification number and the documentation which clarifies the details of the individual. Without the identification there is no valid ground to admit the person as the part of the territory or the country. As the living one requires identification, company is also requiring the same requirements to maintain its identity and uniqueness as compare to other companies, legal entity. One can’t point the existence of MOA of the company because it’s the key essential part before incorporation. Now- a- days, the world is changing rapidly with the innovative ideas and requirements to maintain the functions and maintain the existence in highly competitive society of diversified sectors. From FMCG to AI, from constitution of funds and asset management to its regulation, there is highly necessary for the legal entity which can able to compete backed with proper regulations and sanctions of the government entity. That’s why there is highly necessary of legal entity which will able to manage all these functions backed and protected by human, group of humans and regulations of the jurisdiction where it found its incorporation identity.

As like as the human beings, the memorandum of the association also acts as a representative document and identification.

From the inception of the company incorporation, MOA is highly essential document which must draft and alter times to time as per the requirements of the company’s board. It is the document of identification for the company. It is also describing as the charter of the company which attributes the relation between the shareholders, subscribers, debentures holder. It is the key document which often calling as the foundation stone of the company.

Basic mean behind the incorporation of MOA:

1. Memorandum of association of the company describes about reasons behind the incorporation of the company.

2. Memorandum of association of the company describes the goals and prospects of the company to the individuals in pursuance of knowledge, explanations before investing in the marketable instruments.

3. Memorandum of association of a company provides the assurance to the investors of their capital and funds they invested or in pursuance of invest and provide the transparency. For those enumerated this is a non-trivial part of legal entity.

Companies Act, 2013:

Before the enumeration of the Indian company act 2013, there were also previous statutorised legal rules related to companies act. By the introduction of compliances, mandates, rules and by laws by the other sub jurisdiction companies act giving the precise information about the requirements and advancements.

There are certain rules and regulation we must have to learn and understand before drafting the MOA for the company as a professional practitioner. Section 4 of Indian companies act elucidates about different provision which is indefeasible part before incorporating a MOA for a business entity. Before such procedures, it was very intricated procedure and having less assurance for the incorporation for giving a new name and idea to your business.

Section 4 of the act talks about the

• Name clause
• Registered location (office) clause
• Object clause
• Liability clause
• Share holder clause
• Subscriber clause

A. Name clause

A. Name clause: This is the preface part of the MOA which describes the name of the business and legal entity. In such clause explains about the identity of the company whether it is public limited, private limited company and one person company. In case of public limited company, it names as “LIMITED”, in case of private limited company it names as “P. LTD.”, in case of one person company it names as “OPC LTD”. It is also provided that a person can not draft and incorporate exactly the same type of MOA otherwise it will be the contravention of statutory framework.

B. Registered office clause

B. Registered office clause: This is the 2 most essential part where it describes the place of company function and operation. This particular clause can be altered by providing the proper documentations if the company wants to shift its business location.

C. Object clause

C. Object clause: In the object clause of MOA which describes the certain objects of company and these are different types main object, other object and ancillary object. The main object sets immediate, principal generating business activities of the company incorporated to pursue, ancillary objects talk activities and power reasonable connected to require to enter into the business, leasing properties. Other objects elucidate anticipated and lawful business activities.

D. Liability clause

D. Liability clause: This is the clause which talks about the liability of the members as well as the company for the certain extents. These are limited and unlimited and limited by shares and limited by guarantees. Limited by the shares defines the liability of the member holding the amount of total number of unpaid share capital of the company for such extent. Limited by the guarantee is the members of the company liable for their certain extent amount.

E. Shareholder clause

E. Shareholder clause: This is the clause in MOA where it describes about the shares of the company which means total number of shares and price of each share.

F. Subscriber clause

F. Subscriber clause: This is the clause which talks about the legal person, entity, associations subscribed dealt marketable instruments of the business/company.

Important Doctrines under Company Law

For the protection of company from the such unconventional frames and problems there are some additions of the doctrines which is the lesson abundant features and every institution and company and the investors, subscriber must comply with it.

A. Doctrine of separate legal entity

B. Doctrine of corporate veil

C. Doctrine of ultra vires

D. Doctrine of internal management (torquand law)

E. Doctrine of constructive notice

A. Doctrine of Separate Legal Entity

A. As we get the name of separate legal entity this is the featured doctrine explains the unique feature and elaboration of separate legal entity from the living. By this way company can take part in different operations and functions executioning such as buying and selling of properties, able make agreement, sue and being sued (can initiate the litigation).

B. Doctrine of Corporate Veil

B. In the doctrine of corporate veil, it is the necessary part where a company will not be treated as separate legal entity if it involves in violation of the principles and fairness or such violations executed by the boards and management for the tax evasion, no compliances in regulations.

C. Doctrine of Ultra Vires

C. The doctrine “ultra vires” terms as beyond the power which means if the business or the company makes any work which is not mentioned in its principal book or the memorandum then it will no effect and void ab initio. The investors and the subscribers put their money as per the data provided in the MOA and such breach of promise made in the memo ultimately will make the adverse effect on company.

D. Doctrine of Indoor Management

D. In the doctrine of the indoor management where it defines the principle for the person, legal entity, association wants to come with the business intercourse with the company then it is not necessary to inspect the indoor management of the company.

E. Doctrine of Constructive Notice

E. In the doctrine of constructive notice enumerates about the principle for the person, and legal entity which reflects the acceptance of business documents as well as the principal documents such as MOA, AOA, show the willingness to come with the business.

Procedure for Alteration of Memorandum of Association

As we previously described about the alteration of MOA so it can be performed with these valid steps:

Step 01: Proposal and Drafting

Step 01: in the first step proposal and drafting of the new MOA for the company for changing and enhancing the business operations with new expansions, ideas, propose the drafted MOA before the board of the company.

Step 02: Board Approval and EGM

Step 02: after reviewing of the new document of MOA with proposed models, if the majority board member assented for it then convey the EGM (EXTRAORDINARY GENERAL METTING).

Step 03: Notice of EGM

Step 03: before the EGM pass the notice to other key management person before 21 days. Such as auditor, company secretary, chartered accountant, legal practitioner.

Step 04: General Meeting and Approval

Step 04: in the EGM, the board member will review the proposal and amendment made in the drafted MOA properly and after successfully passing from the review process then all the member as well as the practitioner made their hand seal and sign on it.

Step 05: Filing with Registrar of Companies

Step 05: in the final step, pass the proposal before the ROC (MGT 14).

Different Types of Alteration of MOA

Alteration of Name Clause

Alteration of name clause: For the alteration of the name clause of the company the company must file the special resolution document of the company along with the (INC 24) before ROC. After review process it generally takes 2-3 days and after that the business gets a new name and it’s the duty to reconcile with the revised name in the other elementary documents by changing the new name from old one. Section 13(2) talks about it.

Alteration of the Address

Alteration of the Address: This is the process where a company changes its legal address where it was continuing its operation there are certain requirements for the different procedure.

For changing the location of the company, the company must have to file the (MGT 14) and for changing the document of address from another location of the same city the company must have to file the (MGT 14) along with the (INC22).

For changing the location from one jurisdiction of ROC to another the company must have to file (MGT 14) along with the (INC22) form. In the next steps the company file (INC 23), (INC 28), (INC 22) subsequently. Depends upon Registrar of director order.

For changing the business address from one state to another state the company must have to file (MGT 14) along with (GNL2), subsequently it must have to file (INC26) for the advertisement and (INC22).

Alteration of Objects

Alteration of objects: This process can be done by the company by making the proposed (MGT 14) documentation before the ROC

Alteration of Shareholdings

Alteration of shareholdings: This is the process where the company changes the

1. Increase and decreases the share holding

2. Cancel the holdings. This can also be done by special resolution by filing the (MGT 14).

As described and introduced as a legal entity which had very intricated procedures before for the interpretation, after introduction of such rules, regulations and advanced procedures with few complicated nuances this is great testimony of evolving India with evolving economy and charismatic and exceptional ideas.