The Memorandum of Association is a foundational document of the company which sets its purpose and boundaries. Section 4 of the Companies Act, 2013 sets out the contents of the memorandum. It states the name under which the company is registered, the State of its registered office, the business or objects it proposes to carry on, the liability of its members and its authorised share capital. These particulars are recorded when the company is incorporated. After the company is registered and it wishes to changes its name, objects, capital or the State of its registered office, the memorandum also has to be changed according to the procedure provided under the Companies Act, 2013. Memorandum and articles are not the same, both documents should be read together. The articles may regulate how a power is exercised, but they cannot enlarge the company’s objects or override the memorandum or the Act.

Name clause

The name clause contains the legal name of the company. A public limited company ordinarily ends its name with “Limited”, while a private limited company with “Private Limited”. Section 8 companies are not required to use these words when the Central Government grants the necessary licence.

Registered office clause

The memorandum states the name of the State in which the registered office of the company will be situated. This clause matters because the State determines the jurisdiction of the Registrar of Companies and, in many cases, the jurisdiction of the National Company Law Tribunal and other authorities. A shift within the same State is different from a shift from one State to another. An inter-State shift requires alteration of the memorandum and approval of the Central Government.

Objects clause

This is the part of the memorandum that describes the proposed business of the company. The objects clause states the objects for which the company is formed.

The objects should match the business that the promoters actually plan to carry on. Before starting a new line of business, the company should check whether it falls within the existing objects. If it does not, the objects clause should be altered before the activity is taken up.

Liability clause

The liability clause states whether the liability of the members is limited or unlimited. In a company limited by shares, the liability of a member is limited to the amount unpaid on the shares held by that member.

In a company limited by guarantee, the memorandum records the amount that each member undertakes to contribute to the assets of the company if it is wound up while the person is a member or within one year after the person ceases to be a member. The contribution is applied towards the debts and liabilities covered by the memorandum.

Capital clause

Where the company has a share capital, the memorandum states the authorised share capital and its division into shares of a fixed amount. It also records the number of shares which each subscriber agrees to take. Every subscriber must agree to take at least one share.

The authorised capital fixes the amount up to which the company may issue shares without first increasing its capital. It is different from subscribed capital and paid-up capital. Those amounts depend on the shares actually taken and the money paid on them.

Subscription clause

The subscribers state that they wish to form the company and agree to take the shares written against their names. Their names, addresses, descriptions, occupations and signatures form part of the memorandum, along with the required witness details.

For a One Person Company, the memorandum must also name the person who will become the member if the sole subscriber dies or becomes incapable of contracting. The nominee’s prior written consent is required.

There are declaration which subscribers to the MOA need to be give:

For Company with share capital:

“We, the several persons, whose names and address are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set against our respective names”

For One Person Company (OPC) with share capital:

I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of associationand agree to take all the shares in the capital of the company:

For Company with without share capital:
We, the several persons, whose names and addresses are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association:

Forms of memorandum under Schedule I of the Companies Acy, 2013

Schedule I provides model forms for different kinds of companies:

  • Table A: company limited by shares.
  • Table B: company limited by guarantee and not having a share capital.
  • Table C: company limited by guarantee and having a share capital.
  • Table D: unlimited company and not having a share capital.
  • Table E: unlimited company and having a share capital.

The form used at incorporation should correspond with the type of company being registered. The memorandum is now filed electronically as part of the incorporation process, but its clauses still follow the structure laid down in Section 4 and Schedule I.

Effect of the memorandum

After registration, the memorandum binds the company and its members under the provision of the Companies Act, 2013. The company’s articles must also remain consistent with it. If the articles contain a provision which conflicts with the memorandum, the memorandum will govern, subject in every case to the Companies Act.

The memorandum is also a public document filed with the Registrar. A lender, investor, contracting party or any person reviewing the company can inspect it to understand the company’s stated objects, capital structure and form of liability.