MEMORANDUM OF ASSOCIATION Deptt of Commerce Government College

MEMORANDUM OF ASSOCIATION Deptt. of Commerce Government College, Dera Bassi

INTRODUCTION Memorandum of Association is a public document, and every person who deals with the company is presumed to have a sufficient knowledge of its contents and provisions.

PURPOSE OF MEMORANDUM OF ASSOCIATION ü Memorandum of association is the constitution of a company. ü It is the charter which defines the limitations of the power of a company established under law. ü It contains the fundamental conditions under which company must be incorporated. ü It determines the powers, objects and limits of the company.

ü It is the foundation on which the structure of the company is based. ü It states that the company can not go beyond its Memorandum. ü It enables the shareholders to know what is the permitted range of enterprise. ü It regulates the external affairs of the company.

CLAUSES/CONTENTS OF MOA Association or Subscription Name Registered Office Clauses Of MOA Capital Objects Liability

NAME CLAUSE The memorandum shall state the name of the company with the word, Ø “limited” Ø “(Private) limited” Ø “(Guarantee)limited as the last word of the name of public, private or guarantee limited company” Ø NOTE Ø Single Member Companies should have the last word as “(SMC-Private limited” according to Single Member Companies Rule, 2003

REGISTERED OFFICE CLAUSE Ø Registered office clause is also known as Domicile clause. Ø Under the following clause the part of country is mentioned in which the registered office of the company is to be situated.

OBJECT CLAUSE Object clause is the major portion of the memorandum of association. It contains, Ø Main object of the company Ø Objects which company will undertake in the future Ø As the company cannot go beyond the objects mentioned in its memorandum so any objects that company can undertake in future should also be includes in the object clause.

LIABILITY CLAUSE This clause defines the extent of the liability of each member. It states, Ø Liability of member is limited Ø Liability of member is unlimited or limited to the guarantee given by each member

CAPITAL CLAUSE The capital clause is applicable for the company which has some share capital. It mentions, ü Amount of authorized capital with which the company gets registered ü The number of shares of the company ü Also the nominal value of each share

SUBSCRIPTION CLAUSE This clause provides that. ü Those who have agreed to subscribe to the memorandum must signify their willingness to associate and form of a company. The memorandum of company limited by shares and company limited by guarantee, each shall contain different statements.

CONDITIONS TO BE FULFILLED FOR THE REGISTRATION OF MOA Under [Section 30, 31, 32 &33] Memorandum shall be filed with registrar for registration. The registrar shall register the MOA only if the following conditions are fulfilled, ü Company is being formed for lawful purposes ü None of the objects stated is inappropriate or deceptive ü All legal requirements regarding registration are duly complied with After the registration of MOA, registrar shall enter the name of the company in the registrar of companies and issue certificate of incorporation.

PROCEDURE FOR ALTERATION IN MEMORANDUM OF ASSOCIATION The process of amendment of memorandum of association is different for all the clauses, THE NAME CLAUSE A company may change its name by passing a special resolution and with the prior approval of the Central government. If the company is registered with an undesirable name then it can change it with an ordinary resolution with the approval of the Central Government.

The Central Government can also direct the company within 12 months of its registration to change its name and this will have to be done within three months. The change in name will be effective when it is registered with the Registrar. THE CAPITAL CLAUSE ü By passing an ordinary resolution, company may increase, consolidate, sub-divide or cancel its share capital if authorized by its articles of association ü Under [Sec. 94], company shall file a notice of alteration with the registrar within 15 days

REGISTERED OFFICE CLAUSE Following steps should be taken while altering registered office clause, ü Pass a special resolution ü Obtain confirmation from SECP by filling petition within 60 days ü Give certified copies of order of Commission to the registrar of old and new provinces within 90 days ü Request the registrar of the old province for transfer of file to the registrar of new province ü Under (section 142), intimate to the registrar of the new province on Form-21 within 28 days of change

THE OBJECT CLAUSE While changing the object clause of the memorandum of association, following steps must be taken, Ø Pass a special resolution Ø Obtain a confirmation from SECP by filling a petition within 60 days of resolution Ø File certified copy of the order of Commission with the Registrar within 90 days of confirmation

A company may change its registered office from one state to another or objects clause in so far as it is necessary for any of the following purposes, ü To carry on its business more efficiently ü To attain the main purpose by improved means ü To change or enlarge the local area of its operation

ü To carry on some other business which may be combine with the existing business of the company ü To restrict or abandon any of the objects of the company ü To amalgamate with any other company THE LIABILITY CLAUSE If articles so permit, the liability of the Directors Managing Directors or Manager can be made unlimited by passing a special resolution. The officer concerned should also accord his consent for making the liability unlimited.