A Business Encyclopedia

Memorandum of Association

Definition: The Memorandum of Association or MOA is the legal document that has to be filed with the registrar of companies at the time of incorporation of the company. It is often called as a memorandum and is comprised of fundamental conditions on the basis of which a company operates.

The memorandum of association is the most important document that needs to be formulated with utmost care. It is the document that governs the relationship between the company and the outside. Memorandum of Association serves as the constitution of the company that defines all the rules and regulations that must be complied by every company. It is mandatory for every company that wants to get registered as a private/public limited to prepare the memorandum of association.

Once the document is prepared the company cannot perform anything beyond the limit as mentioned in the memorandum of association. Thus, this is considered as a supreme document and comprises of following important clauses:

  1. Name Clause: The name of the company that must end with the term “limited”. Also, it must be ensured that the name selected for the company should not resemble with the name of any existing company.
  2. Registered Office Clause: This clause requires to mention the registered office address of the company.
  3. Objective Clause: The objective clause requires to mention clearly the objective behind the incorporation of the company, i.e. the purpose for which the company is being established.
  4. Liability Clause: This clause requires to mention the extent to which the shareholders are liable to pay off the debt obligations in the event of the dissolution of the company.
  5. Capital Clause: Company’s authorized capital along with the nominal value of all kinds of shares need to be disclosed here. Also, the company is required to state the list of its assets over here.
  6. Association Clause: As per this clause, the willingness of shareholders is required with respect to their association with the company. For a public limited company minimum, seven members are required to sign the memorandum, whereas in a case of a private limited company minimum two members are required to do the same.

Note: This document is required to be published and presented to the shareholders, creditors and others associated with the company so that everybody knows the lines on which a company shall operate.

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