Companies may need to periodically amend their Memorandum of Association (MOA) to reflect changes in their operational, structural, or strategic directives. The MOA is the foundational legal document defining a company's scope, objectives, and operational boundaries. At IndiaFilings, we understand the significance of MOA amendments and offer expert guidance. From understanding the intricacies of MOA clauses to navigating the legal framework, our team ensures seamless compliance with regulatory requirements.
Contact our experts today to get started with your MOA amendments!
Memorandum of Association (MOA)
The "MOA" refers to the Memorandum of Association, which serves as the foundation document for a company. It is crafted during the company registration process and holds legal significance. The MOA outlines the company's objectives, operational boundaries, and internal regulations, establishing a framework for its operations and defining its relationship with shareholders. It sets the company's scope and legal parameters in clear terms.
The Memorandum of Association covers many aspects of the company, encompassing its operations, delegation of responsibilities, policies, and guiding principles.
What is the MOA Amendment?
An MOA (Memorandum of Association) Amendment refers to the process through which a company amends the provisions outlined in its MOA. An amendment to the Memorandum of Association is permissible under Section 13 of The Companies Act, 2013, in conjunction with the Company Rules Act, which provides the legal framework for modifying the MOA.
Amendments to the MOA are often necessary as a company evolves to reflect changes in its objectives, operations, or governance structure.
When can an MOA be amended?
As mentioned above, the Memorandum of Association (MOA) is a critical document for any company, outlining the fundamental conditions under which it operates. The MOA contains several key clauses:
- Name Clause: Identifies the company's official name.
- Situation Clause: Specifies the location of the company's registered office.
- Object Clause: Describes the company's purposes and the scope of activities it can undertake.
- Liability Clause: States the liability of the company's members, whether limited by shares or guarantees.
- Capital Clause: Details the company's authorised capital, including the number and types of shares.
- Subscription Clause: Includes the signatures of the initial subscribers to the MOA, indicating their agreement to form the company and take up shares.
Key Amendments to the Memorandum of Association (MOA)
An amendment to the MOA can be made to alter any or all of the above-mentioned clauses EXCEPT the Subscription Clause. These amendments can include:
Altering Name in MOA
The MOA will be altered by passing a special resolution to make changes in the company's name. In the case of a name change for a private or public limited company, no approval from the central government is needed. However, in other cases, the central government's consent is necessary.
Registered Office Change (State to State)
A company must change the Memorandum of Association to transfer the registered office to another state. Generally, the reasons for changing the registration to another state include:
For conducting the business more professionally and economically
- To achieve the significant purpose of the company by sophisticated means
- To develop the operations in the current location
- To manage the existing objectives
- To sell the business enterprise wholly or partially.
- To merge the business with another person or another business.
In case the registered office is shifted from one state to another, a special resolution has to be approved, and approval from the company's board of directors has to be acquired by the company. This change in memorandum should be filed with the Registrar of the state from which the company is moving and also to the Registrar of the state where the company wants to shift. After approval from the Registrar of Companies, the changes must be made in the MOA of the Company to reflect the new state where the registered office is located.
Alteration of Objects Clause
The changes to the object clause in the case of a Private Limited Company can be made without any hassles. But if the same is to be done for any company that has raised funds from the public, then a special resolution is required to be passed. Also, this must be published in an English and another local-language newspaper where the company's registered office is located. The details should also be available on the company's website, along with the requisite justifications and modifications.
Also, all the dissenting shareholders should be allowed to exit by the promoters and the shareholders who control the company. This opportunity should be given with the regulations specified by the Securities Exchange Board of India (SEBI).
Alteration of the Liability Cause
A change in the clause needs to be made to limit the liability of the Directors. As the liability of the shareholders cannot be unlimited and, a resolution is to be made to make this change in the liability by passing a resolution.
A copy of the resolution must be filed with the registrar within 30 days of the change.
Alteration of Capital Clause
This change can also be done at a normal general meeting. This change may be required as a subdivision of the shares or the consolidation of shares. Other reasons to make alterations to the capital clause can be the conversion of stock and annulment of the unsubscribed capital. These alterations must be filed with the registrar within 30 days.
Alteration of Authorized Capital
To issue shares, a company must ensure its authorised capital covers the planned amount. If not, it may need to raise its authorised capital and adjust its MOA accordingly.
Documents Required for MOA Amendment
The necessary documents for MOA amendment include:
- Revised MOA: A copy of the Memorandum of Association reflecting the proposed changes.
- Certified Copy of Special Resolution: A certified copy of the resolution passed at the Extraordinary General Meeting (EGM) approving the MOA amendments.
- Explanatory Statement: A document providing explanations and justifications for the proposed changes, distributed to members along with the EGM notice.
- EGM Notice: A formal notice sent to all company members, announcing the EGM and detailing the agenda, including the proposed MOA amendments.
- Form MGT-14: A form submitted to the Registrar of Companies and the above documents officially registers the special resolution and amendments.
Common Procedure for MOA Amendment
Amending the Memorandum of Association (MOA) involves a structured legal process as outlined by The Companies Act, which applies to all companies. Here's a detailed breakdown of the necessary steps:
Step 1: Preparing for the Amendment
Board Resolution: Initiate the process by drafting a board resolution that outlines the intent to amend the MOA. This resolution should clearly state the sections of the MOA to be altered and justify each proposed change. The board of directors must approve this resolution, signifying the company's internal agreement to proceed with the amendments.
Step 2: Drafting the Special Resolution
Resolution Content: The special resolution should be meticulously drafted to include all proposed amendments to the MOA. It must be comprehensive, detailing the exact changes in clauses such as the Object Clause, Name Clause, Capital Clause, etc., as required.
Legal Compliance: Ensure the resolution complies with the relevant sections of the Companies Act that govern MOA amendments. Legal advice may be sought to guarantee adherence to all statutory requirements.
Step 3: Notice of General Meeting
Meeting Notice: A formal notice of the general meeting must be issued to all company shareholders, directors, and auditors. This notice should include the meeting's agenda, date, time, and venue, with a clear mention of the special resolution to alter the MOA.
Advance Notice: The Companies Act mandates a minimum notice period (typically 21 days unless otherwise agreed by all members for a shorter period), which must be strictly followed to ensure the meeting's legality.
Step 4: Conducting the Extraordinary General Meeting (EGM)
Meeting Proceedings: Present the proposed MOA amendments to the members for discussion during the general meeting. It's crucial to address any concerns or questions raised by the members regarding the amendments.
Voting on the Resolution: The special resolution for amending the MOA requires approval by a three-fourths majority of the members present and voting. The voting process should be conducted transparently, adhering to the company's articles of association and the Companies Act.
Step 5: Regulatory Compliance and Filings
Form MGT-14: Post-approval, file Form MGT-14 with the Registrar of Companies (RoC) within the prescribed timeframe (usually 30 days from the resolution's passing). This form serves to register the special resolution with the RoC.
Supporting Documents: Along with Form MGT-14, submit a certified copy of the special resolution, a copy of the altered MOA, and the explanatory statement provided to members along with the meeting notice.
Filing Fee: Ensure the correct filing fee is paid, based on the company's authorised capital and the RoC's fee schedule.
Step 6: Registrar's Approval and Finalization
RoC Review: The Registrar of Companies will review the submitted documents for compliance with the Companies Act and the company's articles. The RoC may seek additional information or clarifications.
Approval and Effectiveness: Once satisfied, the RoC will register the amendment, and the changes to the MOA will take effect from the date of registration. The RoC will issue a confirmation, usually in the form of an updated certificate of incorporation reflecting the amended MOA.
Step 7: Updating Company Records and Notification
Record Updates: After the RoC's approval, update all company records, including statutory registers and internal documents, to reflect the MOA amendments.
Stakeholder Notification: Inform all relevant stakeholders, including shareholders, creditors, banks, and other financial institutions, of the MOA changes to ensure transparency and maintain trust.
Key Considerations for MOA Amendments and Adoption
When contemplating amendments to the Memorandum of Association (MOA) or adopting a new one, certain critical aspects must be kept in mind:
- Capital Clause Alteration: The ability to modify the capital clause is contingent upon authorisation by the company's Articles of Association (AOA). Any changes to this clause must align with the provisions outlined in the AOA.
- Liability Clause Modification: Changes to the liability clause necessitate filing a resolution with the registrar within 30 days post-approval. While it's permissible to amend this clause to limit the directors' liability, shareholders' liability cannot be similarly altered.
- Situation Clause Amendments: When the situation clause about the company's registered office is amended, the company must submit proof or verify the new address within 30 days, typically via Form INC-22.
- Restrictions for Companies Limited by Guarantee: For companies limited by guarantee or those without share capital, amendments to the MOA cannot extend profit-sharing rights to non-members.
Adoption of a New MOA
Companies incorporated before the enactment of the Companies Act 2013 might direct to adopt a new MOA (and potentially new Articles of Association) to comply with the updated format and provisions of the new act. This is particularly relevant for entities established under previous legislations, necessitating a refresh to align with contemporary legal frameworks.
Streamline Your MOA Amendment Process with IndiaFilings
Choosing IndiaFilings for your MOA amendment needs ensures a seamless and hassle-free process. With our expertise and experience in company registration and compliance, we guide you through every step of the MOA amendment process. Our team of professionals ensures that your MOA amendments are handled efficiently, with meticulous attention to detail and adherence to legal requirements. We take care of everything from drafting the necessary resolutions to filing the required documents with the Registrar of Companies.
Contact our experts today to get started!
What is MOA?
Why do companies need to amend their MOA periodically?
What does the MOA define?
What is an MOA Amendment?
When can an MOA be amended?
What are some clauses covered in the MOA?
What is required to alter the name in the MOA?
How is a change in the registered office location reflected in the MOA?
What is the procedure for altering the Objects Clause in the MOA?
How is the liability clause altered in the MOA?
Can the capital clause be altered without legal formalities?
What documents are needed for MOA Amendment?
What is the common procedure for MOA Amendment?
When can the MOA amendments take effect?
What are the key considerations for MOA amendments and adoption?
What is the role of IndiaFilings in MOA amendment?
How can IndiaFilings help streamline the MOA amendment process?
What are the consequences of not amending the MOA when necessary?
Is it possible to amend the Subscription Clause of the MOA?
What should companies do to get started with MOA amendments through IndiaFilings?
Why choose IndiaFilings for MOA amendments?