Memorandum of Association is the principal document for both Public and Private companies. It defines the power and objectives of the company, describes the scope of its operations and its relationship with its stakeholders.
1. Name Clause –
It states the name of the company. Under the following conditions, a company can select its name:
- The name should not be identical or closely – related to an existing company.
- The public company should be ‘listed’ while the private company must use ‘Private limited’ at the end of the name.
- The proposed name must not be undesirable in the opinion of the central government.
- The name should have ‘cooperative’ word in it.
2. Registered office clause –
The MOA of every company must mention the name of the state in which the registered office of the company is to be situated. It determines the area of jurisdiction.
3. Object Clause –
This is a very important clause. This clause determines the rights and powers of the company and also defines its sphere of activities. No activity can be taken up by the company which is not mentioned in the object clause. The clause offers protection to shareholders and creditors by ensuring that funds raised are not going to be used for any other undertaking.
These things need to be kept in mind before making this clause –
- The objectives of the company must not be illegal.
- It should not be against public policy.
- Objects should not be immoral.
4. Liability Clause –
It states the liabilities of its members. In the MOA of a company limited by shares, it is clearly mentioned that their liabilities are limited to the nominal value. Similarly, if MOA of a company is limited by guarantee, then the liability of · members will be limited up to the guarantee held by them.
5. Capital of Company or Capital Clause –
Under this clause, the total capital of the company is stated. The division of capital into equity share capital and preference share capital is also mentioned.
6. Association Clause –
The association clause contains a declaration by several persons whose names and addresses are described and who have the desire of forming into a company.
7. Nomination Clause –
In case of OPC’s MOA, the name of (nominee), such person to be stated who will become a member of the company in case of death or incapability to carry on the contracts of the subscriber.
