What are the 7 Clauses of MOA?
When setting up a company, the Memorandum of Association (MoA) serves as the keystone document outlining the company’s structure and purpose. One of the most important parts of the MoA is its seven crucial clauses. Let’s break down each clause to understand what they’re and why they count. This guide, provided by Startupportal Business Services, ensures that you’re well- equipped with the knowledge to establish your business on a solid legal foundation.
What is MoA?
The Memorandum of Association (MoA) is a foundational legit document that defines the constitution and scope of commands of a company. It’s one of the pivotal documents demanded during the objectification process and serves as a deal between the company and the outward world, defining the company’s relationship with shareholders and stakeholders. The MoA usually includes several essential clauses that define vital aspects of the company’s operations and governance.
Let’s explore each clause in more detail:
1. The Name Clause:
The Name Clause is the first and one of the most critical factors of the MoA. It specifies the legit name of the company, which must be special and mustn’t act the name of any existing company. According to Section 4 (2) of the Companies Act, 2013, the name should carry the word ‘ Limited ’ for a public company or ‘ Private Limited ’ for a private company. The name of the company is its primary identifier in all legal, contractual, and business dealings, making this clause pivotal.
2. The Registered Office Clause:
This clause specifies the state where the company’s listed department will be located. Per Section 12 (1) of the Companies Act, 2013, the registered branch determines the governance of the Registrar of Companies (RoC). The exact address must be handed over within 30 days of objectification and notified to the RoC. This address is the sanctioned location for all communications and legit notices sent to the company.
3. The Object Clause:
The Object Clause is one of the most significant parts of the MoA. As per Section 4(1)(c) of the Companies Act, 2013, this clause outlines the primary objectives for which the company is formed. It includes:
- Primary Objects: The core activities and purposes of the company.
- Matters Necessary in Furtherance: Ancillary objectives that support achieving the primary objectives.
This clause defines what the company can and cannot do, setting clear boundaries for its operations.
4. The Liability Clause:
The Liability Clause of MOA outlines the extent to which members of the company are liable to contribute towards the company’s capital in the event of its winding up. According to Section 4 (1) (d) of the Companies Act, 2013, this clause specifies whether the liability of the company’s members is limited by shares or by guarantee. For companies limited by shares, members’ liability is limited to the overdue amount on their shares. For companies limited by guarantee, members’ liability is limited to the amount they agree to contribute.
5. The Capital Clause:
The Capital Clause specifies the company’s sanctioned share capital, carrying the total number of shares and the nominal value of each share. As per Section 4 (1) (e) of the Companies Act, 2013, this clause defines the ultimate amount of capital the company can boost through issuing shares. It provides a clear picture of the company’s fiscal structure, assuring clarity for investors and stakeholders.
6. The Subscription Clause:
This clause details the commitment of the subscribers to incorporate the company. It includes:
- Names and Addresses of Subscribers: Lists the individuals or entities subscribing to the MoA.
- Number of Shares Agreed to Be Taken: Specifies the number of shares each subscriber is purchasing.
This clause shows the initial shareholders and their investment levels in the company.
7. The Association Clause:
The Association Clause states the intention of the subscribers to form the company and become its members. It outlines the initial membership and the number of shares each subscriber agrees to take. This clause sets the foundation for the company’s ownership structure.
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