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December 14, 2017 Registrationwala

Importance of MoA and AoA in Company Registration

Private Limited Company

Importance of MoA and AoA in Company Registration

Memorandum of Association and Article of Association are very crucial documents for any company as they are fundamental documents for company formations.

The memorandum of association and the article of association together form the constitution of the company. A company cannot be registered and work even for a single day without drafting the memorandum of association and article of association.

�Memorandum of Association

The memorandum of association of any company consists of significant information about the company including the name of the company, its registered address, its scope of activities, criteria governing the relationship of the company with its shareholders and the provision for distribution of shares among the specified shareholders etc.

Memorandum of Association of any company is very important as it offers to the public all the fundamental information about the company and forms the basis for the relationship of the company with its shareholders and outside the world. A company is not empowered undertake any Act which is not specified in its memorandum of Association and even the AOA is bound to comply with the memorandum of association of the company. Thus memorandum of association of any company is a very crucial document. According to section 4 of the Companies Act 2013 the following clauses are required to be specified in the memorandum of association of companies-

  1. Name Clause � It contains the unique and approved name of the company.
  2. Situation Clause- It contains the registered address of the office of the company.
  3. Objective Clause- This clause defines the mains as well as ordinary objectives of the company.
  4. Association and Subscription Clause- It contains the complete details about the subscribers of the shares of the company and the number of shares allotted to them.
  5. Capital Clause- It gives information about the total share capital of the company, assets of the company, the minimum paid-up share capital etc.
  6. Liability Clause- This clause outlines the liabilities of each shareholder/member of the company.

Article of Association

The article of Association is a very crucial document defining and describing the powers, duties and responsibilities of all the people involved and the professionals. It basically states the bye-laws which define the relationship of the company with outsiders. Following are the contents of Article of Association-

  • Share capital including sub-division, rights of various shareholders, the relationship of these rights, payment of commission, share certificates.
  • Lien of shares
  • Calls on shares
  • Transfer of shares
  • Transmission of shares
  • Forfeiture of shares
  • Surrender of shares
  • Conversion of shares in stock
  • Share warrant
  • Alteration of capital
  • General meetings and proceedings
  • Voting rights of members, voting by poll, proxies
  • Directors, their appointment, remuneration, qualifications, powers and proceedings of the boards of directors meetings.
  • Dividends and reserves
  • Accounts and Audits
  • Borrowing powers
  • Winding up

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