Following points highlight the importance of MOA:
1. Fundamental Document –
It is a fundamental document defining the objectives of a company. It is said to be the foundation stone, upon which the future of the company stands and its existence depends.
2. Determines Company Scope –
It determines the scope of operation of a company. A company has to operate within the framework laid down by MOA.
3. Guide to the Company –
It contains information about capital, liability, objectives, etc.
4. Creditors Protection –
The object clause offers protection to the creditors by ensuring that funds raised for undertakings are not going to be risked in any other undertakings.
5. Protection to Investors –
The purpose of the memorandum is to enable the intending investors to know the purpose for which their money is going to be used, and within what fields, they are taking a risk in making the investment.
6. Help Other Parties –
MOA also helps other persons dealing with the company. It enables the persons intending to deal with the company to know with certainty as to whether the contractual relationship which they intend to enter into the company is right or not.
