A Memorandum of Association (MOA) is a legal document that sets out a company's basic framework and constitution.
This is one of the documents required for the formation of a company; along with the Articles of Association (AOA).
The MOA is essentially the charter of the company and outlines the objectives, powers, and limitations of that company.
The Companies Act governs the MOA and must be filed with the Registrar of Companies (ROC) at the time of company registration.
The MOA includes several important details about the company, including-
- Name Clause: The name clause outlines the name of the company and specifies whether it is a public or private company.
- Registered Office Clause: The registered office clause outlines the company's registered address. This is the company's official address for all legal and administrative purposes.
- Object Clause: The object clause outlines the primary objectives of the company. This clause defines the business activities the company is authorised to undertake and the scope of its operations. Any activities outside the scope of the object clause are deemed illegal and ultra vires.
- Liability Clause: The liability clause outlines the liability of the members of the company. In the case of a company limited by shares; the liability of the members is limited to the amount unpaid on their shares. In the case of a company limited by guarantee, the liability of the members is limited to the amount they have agreed to contribute to the company's assets.
- Capital Clause: The capital clause outlines the company's authorised share capital. This is the maximum amount of share capital the company is authorised to issue.
The MOA is a crucial document that governs the operations of the company. Any changes to the MOA must be approved by the members of the company and filed with the Registrar of Companies.
The Alteration Of A MOA serves as a reference point for all stakeholders, including shareholders, directors, creditors, and regulatory authorities.
Who needs an MOA?
In India, the Companies Act of 2013 makes it mandatory for all companies to have an MOA.
The MOA is a public document that is filed with the Registrar of Companies (ROC) at the time of incorporation.
The MOA forms part of the company's constitution, and it cannot be altered without the prior approval of the shareholders and the ROC.
Alteration of MOA
An alteration to the Memorandum of Association (MOA) is a process by which a company changes the provisions of its MOA.
The MOA is a crucial document that governs the company's operations and defines its scope, objectives, and powers.
Therefore, any change to the MOA must be undertaken with care and under the legal provisions governing such changes.
Types of Alteration Of A MOA
The Companies Act of 2013 provides for two types of alterations to the MOA, namely:
- Alteration of Name Clause: A company may change its name by passing a special resolution and obtaining approval from the Registrar of Companies.
- Other Alterations: Any other alteration to the MOA, including changes to the registered office clause, object clause, liability clause, capital clause, etc., requires the approval of the members of the company through a special resolution
Procedure for alteration of MOA
Step 1: Drafting the Special Resolution
The first step is to draft a special resolution proposing the alteration of the MOA. The resolution must be drafted under the provisions of the Companies Act, and the Board must approve its Directors. The resolution should specify the proposed alteration and the reason for it.
Step 2: Notice of General Meeting
The company must give notice of the general meeting to all the members of the company. The notice must specify the purpose of the meeting, which is to consider and pass the special resolution to alter the MOA. The notice must be sent at least 21 days before the date of the meeting.
Step 3: Hold the General Meeting
The general meeting must be held on the date and time specified in the notice. The members must be allowed to discuss the proposed alteration and ask questions. The special resolution must be passed by a majority of not less than three-fourths of the members present and voting.
Step 4: Filing Forms with the Registrar of Companies.
After passing the special resolution, the company must file the following forms and documents with the Registrar of Companies within 30 days of passing the resolution:
- Form MGT-14: This form is used to file the special resolution with the Registrar of Companies.
- Altered MOA: A copy of the altered MOA must be filed along with Form MGT-14.
- Payment of Fees: The company must pay the necessary fees for filing the forms and the altered MOA.
Step 5: Approval by the Registrar of Companies
The Registrar of Companies will examine the forms and the altered MOA filed by the company. If the forms and the MOA are in order and comply with the provisions of the Companies Act, the Registrar will approve the alteration. The alteration takes effect from the date of approval by the Registrar.
Step 6: Updating Company Records
The company must update its records, including the register of members, register of directors, and other statutory registers, to reflect the alteration.
The company must also notify all its stakeholders, including creditors, shareholders, and regulatory authorities, about the alteration.
Alteration Of A MOA of a company is a significant process that requires careful consideration and adherence to legal provisions.
It is always advisable to allocate professionals' help when dealing with MOA alterations.
Due to the complex legal framework involved, companies may lack the knowledge to ensure a streamlined process.
Especia employs professionals who are experts at MOA alteration. These experienced professionals will make sure that you get a hassle-free and easy experience.
Procedure for alteration of name clause
The procedure for alteration of the name clause of a company in the Memorandum of Association (MOA) is as follows:
- Convening a Board Meeting: The first step is to convene a board meeting and pass a resolution proposing the alteration of the name clause. The board resolution must specify the proposed new name and the reasons for the change.
- Availability of Name: The company must check the availability of the proposed new name with the Registrar of Companies. The company must ensure that the proposed name is not identical or similar to the name of any existing company.
- Convening a General Meeting: The company must convene a general meeting of its members to consider and pass the special resolution for the alteration of the name clause. The notice of the general meeting must specify the proposed new name.
- Passing a Special Resolution: The special resolution must be passed by a majority of not less than three-fourths of the members present and voting. The company must record the special resolution in the general meeting minutes.
- Approval from the Registrar of Companies: After passing the special resolution, the company must obtain the approval of the Registrar of Companies. The company must apply for the approval of the new name with the Registrar of Companies. The following documents are required for the approval of the registrar:
- A copy of the special resolution
- A copy of the notice of the general meeting
- A copy of the altered MOA
- The prescribed fee
- Suppose the Registrar of Companies is satisfied that the proposed name is not identical or similar to the name of any existing company. In that case, the Registrar will issue a new certificate of incorporation.
- Updating Company Records: After obtaining the approval of the Registrar of Companies, the company must update its records, including the certificate of incorporation, the MOA, and other statutory registers, to reflect the new name. The company must also notify all its stakeholders, including creditors, shareholders, and regulatory authorities, about the change in the name.
Possible challenges of altering an MOA
the alteration of MOA may pose several challenges, some of which are as follows:
- Compliance with legal requirements: The alteration of MOA must comply with the legal requirements under the Companies Act, 2013, and other applicable laws. Failure to comply with the legal requirements may render the alteration invalid and ineffective. This can turn out to be a difficult and tedious process. Especia employs professionals who are knowledgeable about the compliance structure and legal framework involved in the alteration process. Especia also makes sure that the client has an easy and worry-free experience so they can focus on their business.
- Obtaining approval from shareholders: The alteration of MOA requires the approval of the shareholders by passing a special resolution. The process of obtaining shareholder approval may be challenging, particularly if there is a lack of consensus among the shareholders.
- Obtaining approval from regulatory authorities: The alteration of MOA requires approval from regulatory authorities such as the Registrar of Companies (ROC). The ROC may reject the application for the alteration of MOA if it does not comply with the legal requirements or is not in the public interest.
- Notifying stakeholders: The alteration of MOA requires the company to notify its stakeholders, including shareholders, creditors, and regulatory authorities, about the change. Failure to notify stakeholders may lead to legal and regulatory repercussions.
- Convening meetings: The alteration of MOA may require the company to convene meetings of its Board of Directors and shareholders, which can be time-consuming and costly.
- Reprinting of documents: The alteration of MOA requires the company to reprint several documents, including the certificate of incorporation, share certificates, and other statutory registers, to reflect the change.
The alteration of MOA may pose several challenges that need to be carefully considered and addressed.
Companies must ensure that the alteration complies with the legal requirements, obtain the necessary approvals from regulatory authorities and stakeholders, and notify all relevant parties about the change.
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Conclusion
In conclusion. The alteration to the MOA is a crucial process that requires careful consideration and adherence to legal provisions.
The alteration must be undertaken in the best interest of the company and must not violate any legal provisions or agreements.
FAQs related to Alteration Of A MOA
1. Can the alteration of MOA be challenged in court?
Yes, the alteration of MOA can be challenged in court if it does not comply with the legal requirements or is not in the public interest.
2. What is the time limit for filing the altered MOA with the ROC?
The altered MOA must be filed with the ROC within 30 days of the special resolution's passing.
3. Can the alteration of MOA affect the rights of shareholders?
Yes, the alteration of MOA can affect the rights of shareholders, particularly if it involves a change in the capital structure or the rights of a particular class of shareholders. Therefore, the company must ensure that the alteration does not affect the rights of shareholders and that they are adequately informed about the change.
4. Is it possible to alter the MOA multiple times?
Yes, a company can alter its MOA multiple times, provided it complies with the legal requirements and obtains the necessary approvals.
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