So after applying your brain all over the night, you got to the conclusion that you need to give your business idea a chance, and you have decided that from next morning you will be working towards your entrepreneur goals. You google everything about how to start a new company, what it takes you to register your company with the registrar of companies and one thing you got common in all your browsing pages is the 3 alphabet abbreviation i.e. MOA, Memorandum Of Association, the most important document in giving birth and incorporating your new company.
So what is MOA?
As you all are aware that your Company is formed with you or certain minimum number of persons who come together with a common objective and with basic understanding about liability of each of them, capital contribution by each of the members, So what MOA does is, it describes all details which are there in constituting your company.
In other words Memorandum of Association, means such a document which comprises of all the objectives, rights, liabilities, mentioned therein, in relation to constitution of your proposed Company and which is recognized by law as valid, acceptable and binding on all those subscribing to such Charter and all those who deal with the Company formed.
What is the need for MOA?
According to the Provisions of the Companies Act, 2013, it is mandatory for you to draft and submit a copy of Memorandum of Association to make your company registered. While drafting MOA for your company, you must keep in mind, the provisions of the Companies Act 2013.
As it defines the objectives and activities of your business, You tend to perform the functions which are stated in MOA. If your business is performing activities which are not stated in MOA, Then you will be penalized in monetary term and maybe it could land you in the prison too.
What does it contain?
So MOA is a Birth Certificate for your company which is being provided by Registrar of Companies, you must give ample amount of time and care in forming it and above all these you have to follow a pre-planned format of MOA, provided by Provisions of Companies Act. The format Contains following clause:
a. Name Clause: This clause contains the full name of the Company with which it is incorporated. You must provide complete name of the Company with word “Limited” if you are going for a public limited company or “Private Limited” in the case of a private limited company. The name of the Company appearing in the MOA should match EXACTLY with the as approved by the Registrar of Companies (RoC)
b. Registered Office Clause/Domicile Clause: This clause indicates the jurisdiction of Corporate Regulator, under which the Company’s registered office falls. The jurisdiction of RoC to be mentioned in Registered Office should be based on location district of the state in which registered office is proposed to be situated; hence clarity should be provided with respect to the office of RoC under whose jurisdiction the district falls.
c. Objects Clause: This clause indicates the objects for which your Company is incorporated. Drafting of Objects Clause of your Company is one of the very crucial aspects of preparing Memorandum of Association because:
1) Since the shareholder, while making the investment in your company must possess the information regarding the business plans of the company. Further since, the shareholder is putting his money in your company he must know the purpose for which the money has been put to the use.
2) The object clause confers a degree of security to the creditors since the object clause defines the limit to which your company can operate the creditor will remain safe if the objects clauses are provided for, and the company sticks to those objects.
The Object clause in the Memorandum is classified as:-
Main Objects:- These are the objects which your Company wish to attain immediately after it is incorporated. These objects need to be very clear and should encompass all the activities such as manufacture, sale, trade, import, export, exchange, which are part of main business activities.
Objects ancillary and incidental to the attainment of the main object:- These objects cover activities which are secondary in nature but are essential fo the attainment of main (primary) Object, these objects generally do not include profit-making or revenue generating activities and are transitory in nature.
Other Objects:- These are the Objects which are classified as objects not included in (a) or (b) above. These objects are entirely different from those in which Company is dealing presently, and will include those in which it proposes to deal anytime in future. It is not mandatory to have the Other Objects in the Memorandum of Association.
The object clause has three major categories:
Liability Clause: This clause tells us about limit on monetary liability of each member towards Company.
Capital Clause: This clause denotes the maximum capital which Company can raise at given point of time.
Subscription OR Association Clause: This clause is in the nature of Declaration and Undertaking given by all the subscribers to Memorandum of Association to the effect they have agreed to form a Company and further undertake that they will pay for the shares agreed to subscribe.
Capital Clause: This clause denotes the maximum capital which Company can raise at given point of time. If your company having a share capital, the Memorandum shall also state:
(a) The amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount: Authorized Share Capital.
(b) Minimum paid Capital of Rs. 1,00,000/- if the Company is a Private Co and Rs. 5,00,000/- in case Company is a public Company: Paid up Capital
Subscription OR Association Clause: This clause is in the nature of Declaration and Undertaking given by you to Memorandum of Association to the effect you have agreed to form a Company and further undertake that you will pay for the shares agreed to subscribe.
Each of the Subscribers to Memorandum of Association should subscribe to at least one Equity Shares apart from executing Memorandum of Association in his own handwriting.
Conclusions:-
So after completing the whole process, your drafted MOA is submitted to the Registrar of Companies. Once it gets approved by RoC, your company will get a CIN: Company Identification Number and you can incorporate your business activities.
I know you must be thinking the ways to get it over with this MOA thing, but my friend you can’t escape from it, all you need is to visit us because we at Quick company assure you in getting all the paper work done and helps you to get your company registered.
About the Author:-
Lokesh Sharma is working as Marketing Manager at Quickcompany.in a leading website for Company Registration Online in India.
CAclubindia
