The Memorandum of Association (MOA) is a crucial document that outlines the fundamental details and objectives of a company. It is one of the key documents required for the incorporation of a company in India under the Companies Act of 2013. Here’s an elaboration on the Memorandum of Association with reference to the Companies Act 2013:
1. Definition (Section 2(56)):
The Companies Act, 2013 defines the Memorandum of Association as the memorandum referred to in Section 4 of the Act.
2. Nature and Significance:
The MOA is a legal document that defines the scope of a company’s activities, its relationship with shareholders, and its external dealings. It is a charter that outlines the company’s constitution.
3. Contents of Memorandum of Association (Section 4):
The MOA must contain the following clauses:
- Name Clause: Specifies the name of the company.
- Registered Office Clause: Indicates the state where the registered office is situated.
- Object Clause: Describes the main objectives for which the company is formed.
- Liability Clause: States the nature of the liability of its members (limited by shares or guarantee or unlimited).
- Capital Clause: Specifies the authorized capital of the company and the division into shares.
4. Importance of Object Clause:
The Object Clause is crucial as it defines the scope and purpose of the company’s activities. Any activity undertaken beyond the scope of the Object Clause is considered ultra vires (beyond the powers) and may be void.
5. Doctrine of Ultra Vires:
The Companies Act of 2013 continues the doctrine of ultra vires, meaning a company cannot undertake activities that are not within the scope of its stated objects in the MOA.
6. Alteration of Memorandum (Section 13):
The MOA can be altered by a special resolution passed by the shareholders. However, the alteration must be within the legal limits prescribed by the Companies Act.
7. Doctrine of Indoor Management (Section 131):
While the MOA is a public document, the internal management of the company is governed by its articles of association. Outsiders dealing with the company are entitled to assume that the internal procedures have been followed.
8. Public Inspection (Section 399):
The MOA, along with the Articles of Association, is open to public inspection. Any person can request a copy of the MOA by paying a prescribed fee.
9. Relation with Articles of Association:
The MOA and Articles of Association work in tandem. While the MOA outlines the company’s external objectives and scope, the Articles define its internal rules and regulations.
10. Effect on Company’s Powers:
The company derives its powers from the Memorandum of Association. Any act beyond the powers specified in the MOA would be considered unauthorized.
Understanding and adhering to the requirements of the Memorandum of Association is critical for the proper incorporation and functioning of a company. It provides a legal framework within which the company operates and sets the boundaries for its activities.
