Main Clauses of Memorandum of Association

Main Clauses of Memorandum of Association

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Main Clauses of Memorandum of Association

Every Memorandum of Association (MOA) must contain the required mandatory clauses as per Companies Act, 2013. The purpose of this article is to explore the various clauses, i.e. the mandatory information, which is to be furnished in the MOA during company registration.

Check out this article, to know more about Memorandum of Association.

Name Clause

A legal entity, as obvious as it may be, must have a name, which forms the identity of the enterprise. The name clause, the first of the MOA, protects the entity against future registrations of the same or closely identical name. Likewise, the name of the entity shouldn’t be similar or closely identical to any other operating entity.  The Central Government may find a name to be undesirable and misleading, in which case it may prohibit it. A company should end with the word ‘limited’ in case of a public limited enterprise, and ‘private limited’ in the case of a private limited enterprise.

Online tool to Check Company Name Availability.

Domicile Clause

The second clause of the MOA, the ‘domicile’ clause specifies the location of the company’s registered office. The domicile clause will not exactly contain the address of the registered office, but the state or union territory in which the registered office of the company is located.

Objects Clause

The third clause of the MOA, the objects clause must state the objects of the company for which the company is proposed to be incorporated. The objects are divided into two parts containing two types of objects, which are as follows:

  • The objects of the company for which the company is proposed to be incorporated.
  • Any matter considered necessary in furtherance thereof.

The statement of a company’s objects in its MOA makes way for the following benefits:

  • It provides protection to subscribers, who are benefited with the required knowledge, pertaining to the purposes to which their money can be applied.
  • It provides protection to persons who deal with the company, who can infer from it the extent of the company’s powers.
  • It restricts the Board of Directors to usage of company’s funds for the activities stated in objects clause.

Liability Clause

The fourth clause of MOA, the liability clause declares the liability of members of the company to be either limited or unlimited. The MOA of the company limited by shares must declare that the liability of the members of the company is limited. The Memorandum of Association of a company limited by guarantee must state the amount of contribution, that every member agrees to contribute to the assets of the company in the event of the company being wound up. However, in case of a limited company, the liability of directors or managers of a company may be unlimited, if specified in the memorandum.

Capital Clause

The fifth clause of the MOA, the capital clause, states the company’s share capital. The clause must specify the total number of share capital with which the company must be registered, the number of shares of each kind and the face value of each share. Point to be noted, a private or public company not intended to be listed in a stock exchange may have any face value, but a public company intended to be listed will have such face value as has been prescribed.

Subscription Clause

The sixth and final clause of the MOA, the subscription clause, should state the purpose of the subscribers to incorporate the company, agreeing to take the shares in the company based on the number written in the Memorandum. Another detail to be specified is the shares agreed to be taken by each subscriber. Know more about MOA Subscribers Sheet.

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Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.