Objectives for Registering MoA
1. To Provide a Legal Status: The MoA is a legally binding document that establishes the scope of the company’s activities and helps the company provide a legal identity. The MoA also helps establish the company as a separate legal entity distinct from its owners or members.
2. To Define the Company’s Purpose: The MoA of a company sets out the objectives and activities that the company is authorized to undertake. The MoA makes sure that the company operates within the boundary marked by the MoA and complies with the applicable regulatory and statutory framework.
3. To Protect the Interests of Shareholders: The MoA also highlights the rights and obligations of the shareholders and members, which helps to protect their interests. It also helps to avoid and deal with any unauthorized activities or decisions that could jeopardize the company and affect the shareholders.
4. To Facilitate Capital Raising: The MoA states the authorized share capital of the company, which helps investors and other stakeholders understand the potential size of the company and the amount of capital that is required by the company to conduct its operations. This helps the company raise capital through the issuance of shares.
5. To Facilitate Decision-Making: The MoA of the company helps facilitate effective and efficient decision-making by establishing the company’s powers and limitations. It provides suggestions to the management and directors on the activities that the company can undertake by staying within the boundaries marked by the MoA. This helps the management make informed business decisions.
6. Public Document: MoA is a public document as specified under Section 399 of the Companies Act, 2013. The section establishes that every person who is contracting with the company or enters into a contract with the company shall be presumed to have matters, affairs, and conditions contained in the MoA.
Memorandum of Association (MoA) : Meaning, Format, Objectives and Clauses
The provisions of Section 2(20) of the Companies Act, 2013 define a company as a “Company incorporated under this act or any previous company law.” A company is an artificial person that is created by law and has a separate legal entity, perpetual succession, a common seal, and limited liability. As a company is one of the most popular forms of business arrangement among entrepreneurs, it goes through strict and statutory compliance. The compliance of a company is a complex activity that includes many formalities and strict procedures. The formation of a company takes place in stages; every stage involves a set of documents and pre-defined procedures. Among all the other documents, The Memorandum of Association and the Article of Association are the most important documents for an organization.
Geeky Takeaways:
- A company is a separate legal entity that a group of individuals forms to engage in and operate a business organization in a commercial or industrial capacity.
- The Memorandum of Association and the Articles of Association are the most important documents for an organization.
- The Memorandum of Association is also known as the charter of the company. The MoA states all the rights, privileges, and powers of the company.
- The MoA is signed by seven members in the case of a public limited company, whereas in the case of a private limited company, the MoA is signed by at least two subscribers of the company.
Table of Content
- Format of MoA
- Objectives for Registering MoA
- What are the Main Clauses of the MoA?
- Contents of Memorandum of Association (MoA)
- Alteration of Memorandum of Association
- Conclusion
- Frequently Asked Questions (FAQs)
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