UNITED WORLD SCHOOL OF LAW

SUBJECT: COMPANY LAW

TOPIC: MEMORANDUM OF ASSOCIATION AND ITS VARIOUS

CLAUSES

SEMESTER 5

BATCH 2019-2024

SUBMITTED TO: SUBMITTED BY:

Prof. Nitesh Nanavati Shaily Agrawal

ENROLLMENT NO:
20190401081

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 DECLARATION

The text reported in the project is the outcome of my own efforts and no part of this project
assignment has been copied in any unauthorized manner and no part of it has been
incorporated without due acknowledgement.

-SHAILY AGRAWAL

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TABLE OF CONTENTS

INTRODUCTION...............................................................................................................................5
DEFINITION OF MEMORANDUM OF ASSOCIATION.............................................................5
MEANING OF MEMORANDUM OF ASSOCIATION..................................................................6
OBJECT OF REGISTERING A MEMORANDUM OF ASSOCIATION OR MOA...................6
FORMAT OF MEMORANDUM OF ASSOCIATION....................................................................7
IMPORTANCE OF THE MEMORANDUM OF ASSOCIATION.................................................7
USE OF THE MEMORANDUM OF ASSOCIATION....................................................................8
MEMORANDUM OF ASSOCIATION CLAUSES..........................................................................9
CONCLUSION..................................................................................................................................12
BIBLIOGRAPHY..............................................................................................................................13

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RESEARCH METHODOLOGY
A. Objective:

 To do an in-depth study of the topic Memorandum of Association and its various

clauses.

B. Hypothesis:

 Memorandum of Association is a legal document which defines the purpose for which
the company is formed. It describes the powers of the company and the conditions
under which it operates.

C. Research Questions:

 What is Memorandum of Association?

 What are the various clauses of Memorandum of Association?

D. Coverage And Scope:

 The coverage of this project is limited to the extent of the topic Memorandum of
Association and its various clauses with respect to the Companies Act, 2013.

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INTRODUCTION

A company is designed when a number of people come together for achieving a specific
purpose. This determination is usually commercial in nature. Companies are usually formed
to earn profit from business activities. To incorporate a company, a submission has to be filed
with the Registrar of Companies (ROC). This application is vital to be submitted with a
number of documents. One of the important documents that are required to be submitted with
the application for incorporation is the Memorandum of Association.1

DEFINITION OF MEMORANDUM OF ASSOCIATION

Section 2(56) of the Companies Act, 2013 describes Memorandum of Association. It states
that a “memorandum” can be understood as two things:

 Memorandum of Association as originally framed;

Memorandum as originally framed refers to the memorandum as it was during the

incorporation of the company. 

 Memorandum as altered from time to time;

This means that all the alterations that are made in the memorandum from time to time will
also be a part of Memorandum of Association. 

The section also describes that the alterations must be made in pursuance of any previous
company law or the present Act. 

In accordance to this, according to Section 399 of the Companies Act, 2013, any person can
inspect any document filed with the Registrar in pursuance of the provisions of the Act.
Henceforth, any person who wants to deal with the company can know about the company
through the Memorandum of Association.

1
Pearl Narang ‘Memorandum of Association: know everything about it’ (18th October 2019, ipleaders)
<https://blog.ipleaders.in/memorandum-of-association-2/#Definition_of_Memorandum_of_Association>
Accessed on 17th November 2021

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MEANING OF MEMORANDUM OF ASSOCIATION
Memorandum of Association is a legal document which defines the purpose for which the
company is formed. It describes the powers of the company and the conditions under which it
operates. It is a document that comprises all the rules and regulations that govern a
company’s relations with the outside world. 

It is obligatory for every company to have a Memorandum of Association which defines the
scope of its operations. Once prepared, the company cannot operate outside the scope of the
document. If the company goes outside the scope, then the action will be considered ultra
vires and hence will be void. 

It is a basis on which the company is made. The whole structure of the company is detailed in
the Memorandum of Association. 

The memorandum of association is a public document. Thus, if a person wants to enter into
any contracts with the company, all he has to do is pay the mandatory fees to the Registrar of
Companies and obtain the Memorandum of Association. Through the Memorandum of
Association, he will get all the particulars of the company. It is the duty of the person who
indulges in any dealings with the company to know about its memorandum.2 

OBJECT OF REGISTERING A MEMORANDUM OF ASSOCIATION

OR MOA
Memorandum of Association is an important document that contains all the details of the
company. It administers the relationship between the company and its stakeholders. Section 3
of the Companies Act, 2013 defines the importance of memorandum by stating that, for
registering a company, 

 If it is a public company, seven or more people are required;

 If it is a private company, two or more people are required;
 If it is a one-person company, only one person is required.

In all the above situation, the concerned people should first subscribe to a memorandum
before registering the company with Registrar. 

Thus, Memorandum of Association is important for registration of a company. Section 7(1)

(a) /of the Act describes that for incorporation of a company, Memorandum of Association
2
Pearl Narang ‘Memorandum of Association: know everything about it’ (18th October 2019, ipleaders)
<https://blog.ipleaders.in/memorandum-of-association-2/#Definition_of_Memorandum_of_Association>
Accessed on 17th November 2021

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and Articles of Association of the company should be suitably signed by the subscribers and
filed with the Registrar. With this, a memorandum has other objects as well. These are,

It lets the shareholders to know about the company before buying it shares. This aids the
shareholders determine how much capital will they invest in the company. 

It offers information to all the stakeholders who are willing to associate with the company in
any way. 3

FORMAT OF MEMORANDUM OF ASSOCIATION

Section 4(5) of the Companies Act describes that a memorandum should be in any form as
given in Tables A, B, C, D, and E of Schedule 1. The Tables are of different types because of
different kinds of companies. 

Table A – It is appropriate to a company limited by shares.

Table B – It is appropriate to a company limited by guarantee and not having a share capital.

Table C – It is appropriate to a company limited by guarantee and having a share capital.

Table D – It is appropriate to an unlimited company not having a share capital.

Table E – It is appropriate to an unlimited company having a share capital. 

The memorandum must be printed, numbered and divided into paragraphs. It should also be
signed by the subscribers of the company.

IMPORTANCE OF THE MEMORANDUM OF ASSOCIATION

 Determines the area of operation 

It provides a list of activities that an organization can undertake. Apart from this list, any
other operation will be void.

 Determines the relationship of the company with outsiders 

3
Pearl Narang ‘Memorandum of Association: know everything about it’ (18th October 2019, ipleaders)
<https://blog.ipleaders.in/memorandum-of-association-2/#Definition_of_Memorandum_of_Association>
Accessed on 17th November 2021

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The only purpose of this document is to disperse the necessary information to the
shareholders, creditors and other stakeholders. It vitrines the range of enterprise and the
powers of it.

 Fixed charter of the company 

The memorandum of association is considered to be as a fixed charter for the company (as
per section 16 of the Companies Act).

 Basis of incorporation 

You are supposed to file the memorandum of association with the registrar of the companies
in order to get it incorporated. For this, it should be contracted by at least 7 persons in the
case of a public company and 2 persons in the case of a private company.

USE OF THE MEMORANDUM OF ASSOCIATION

The Memorandum of Association (MoA) assistances establish the extent and scope of the
business activities that a particular company can carry out. The company can perform
business activities that they have stated in the Memorandum of Association (MoA). If you
wish to expand your business activities into other areas of the market, you will have to make
variations to the memorandum accordingly.

A Memorandum of Association (MOA) is a legal document relevant to limited liability

companies. Limited Liability Companies includes  Private Limited Company (Pvt Ltd)
and Limited Liability Partnership (LLP). MOA is used to describe the company’s relationship
with the shareholders. The MOA is a paper of public record i.e. anyone who wishes to see a
company’s MoA can do so under the Right to Information (RTI) Act. MoA also defines the
company’s name, the physical address of the registered office, the names of shareholders and
the distribution of shares. Sometimes, MoA also comprises the exemptions and tweaks for a
particular company. For instance, Private Limited Companies have a lot of exemptions as
compare to other companies. Read Exemptions Private Limited Company.

The MOA and the Articles of Association (AOA) put together, assist as the constitution of
the company. The MOA is not applicable in the U.S. but is a legal requirement for limited
liability companies in European countries including the United Kingdom, France, and the
Netherlands, as well as some Commonwealth nations.4
4
Pearl Narang ‘Memorandum of Association: know everything about it’ (18th October 2019, ipleaders)
<https://blog.ipleaders.in/memorandum-of-association-2/#Definition_of_Memorandum_of_Association>
Accessed on 17th November 2021

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MEMORANDUM OF ASSOCIATION CLAUSES
Memorandum of Association (MOA) includes six various clauses as mentioned below:

 Name Clause
 Domicile Clause
 Objects Clause
 Liability Clause
 Capital Clause
 Subscription Clause

NAME CLAUSE

The name of the company is its primary unique identity. Thus, the name clause of the
memorandum contains of the authentic, legal and approved name of the company. Company
names should not bear any resemblances to a company registered with a similar name
because many times these companies protect the name of their companies via a Trademark
Registration procedure.

But there are some conditions that need to be complied with. 

Section 4(1)(a) states: 

1. If a company is a public company, then the word ‘Limited’ should be there in the
name. Example, “Robotics”, a public company, its registered name will be “Robotics
Limited”.
2. If a company is a private company, then ‘Private Limited’ should be there in the
name. “Secure”a private company, its registered name will be “Secure Private
Limited”.
3. This condition is not applicable to Section 8 companies.

What are Section 8 companies? 

Section 8 Company is named after Section 8 of the Companies Act,2013. It defines

companies which are established to promote commerce, art, sports, education, research,
social welfare, religion etc. Section 8 companies are like to Trust and Societies but they have
a better recognition and legal standing than Trust and Societies. 

What kind of names are not allowed? 

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The name stated in the memorandum shall not be, 

 Identical to the name of another company;

 Too nearly resembling the name of an existing company. 

According to Rule 8 of the Company (Incorporation) Rules,2014.

If a company adds ‘Limited’, ‘Private Limited’, ‘LLP’, ‘Company’, ‘Corporation’, ‘Corp’,

‘inc’ and any other kind of designation to its name to distinguish it from the name of the other
company, the name would still not be accepted. 

DOMICILE CLAUSE

The domicile clause contains all possible details of the registered office of the company. It
has the name of the State or Union Territory of the registered office and may and may not
have the particular address of the office. It also has the names of the registrars enrolled.

OBJECTS CLAUSE

Objects Clause is the main body of the memorandum. It offers a list of all the operations of
the company. Every motive and operation the company is into must be mentioned in the
object clause. Also, any such operation which is not stated in the object clause is considered
to be beyond the reach of the company.

The objects of a company fall into two groups as prescribed below:

1. The proposed objects of the company for which it is being incorporated

2. Matters considered essential in furtherance thereof

Apart from just asserting out the objectives of the company the statement of objects in the
company’s MoA empowers the people associated with the company with the following
benefits

 It provides protection to the subscribers as they have complete knowledge of where

their valuable money is being invested.
 Protects the individuals and/ or companies that deal with the concerned company as
they have knowledge of the extent of the companies’ powers.
 The board of directors of the company is constrained from using the funds of the
company only to the objects specified in the Memorandum.5
5
‘Memorandum of Association’ (legalrasta) <https://www.legalraasta.com/memorandum-of-association/>
Accessed on 17th November 2021

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LIABILITY CLAUSE

The Liability Clause offers legal protection to the shareholders by protecting them from being
held personally liable for the loss of the company. 

There are two types of limited liabilities: 

 Limited By Shares – Section 2(22) of the Companies Act, 2013 describes a company
limited by shares. In a company limited by shares, the shareholders only have to pay
the price of the shares which they have subscribed to. If for some reason they have not
paid the full amount for the shares and the company winds up then they will only be
liable to pay the unpaid amount. 
 Limited By Guarantee – It is stated in Section 2(21) of the Companies Act, 2013. A
company limited by guarantee has members in its place of shareholders. These
members undertake to pay to the assets of the company at the time of winding up. The
members give guarantee of a fixed amount that they will be liable for. 

Non-profit Organizations and other charities generally have a structure of companies limited
by guarantee. 

CAPITAL CLAUSE

This particular clause mentions the share capital with which the company is registered. With
this, the capital clause should also mention the types of shares, the number of each type of
share, and the face value of each share.

Private companies and public companies not proposed to be listed in the stock exchange may
assume any face value depending on a number of factors however, public companies to be
listed will have a prescribed face value of the shares.6

SUBSCRIPTION CLAUSE

The last and final clause of the Memorandum of Association is known as subscription clause.
The subscription clause essentially lists down the motives of the shareholders behind the
incorporation of the company and also states that the subscribers are agreeing to take up

6
Pearl Narang ‘Memorandum of Association: know everything about it’ (18th October 2019, ipleaders)
<https://blog.ipleaders.in/memorandum-of-association-2/#Definition_of_Memorandum_of_Association>
Accessed on 17th November 2021

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shares in the company. It also lays down the number of shares taken up by each subscriber. It
is all according to the details specified in the MoA Subscriber Sheet.7

CONCLUSION
The Memorandum of Association is a very important document without which the company
cannot be incorporated. It is a agreement document of the company and MOA and AOA both
act as a constitution of the company.

BIBLIOGRAPHY

 https://www.legalraasta.com/memorandum-of-association/

 https://www.upcounsel.com/explain-the-contents-of-memorandum-of-association

 https://cleartax.in/s/memorandum-of-association-moa

7
‘Memorandum of Association’ (legalrasta) <https://www.legalraasta.com/memorandum-of-association/>
Accessed on 17th November 2021

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 https://blog.ipleaders.in/memorandum-of-association-2/

#Definition_of_Memorandum_of_Association

 Companies Act 2013

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