Importance Of MOA Of Private Limited Company | Ebizfiling

 


 Introduction  

 

The Memorandum of Association (MOA) is a legal document that outlines the fundamental rules of companies, the business activities of the company, and its organizational structure. The MOA describes the structure and functions of a company, the rights of the members of the company and serves as the company's charter for the benefit of the general public. The Memorandum of Association lists the permissible scope of business activities to provide direction to shareholders, creditors, and other parties. When forming your Private Limited Company in India, a good Memorandum of Association must be prepared to safeguard both you and your business in the long run. So in this blog, we will discuss the importance of MOA of Private Limited Companies and the content included in MOA.

 

 Importance of MOA of Private Limited Company 

 

  • The MOA provides information regarding the goals of the company and the operation of shareholders and potential investors.

 

  • The MOA document informs the employees of the company about the collaborators, vendors, and also others about the company's purpose and scope of business.

 

  • It protects the company by assuring that the funds of a company are only used for specific purposes.

 

  • The charter of a company has the authority to govern its scope of functioning. The MOA also restricts the activities of a business.

 

 Contents of the Memorandum of Association of Private Limited Company 

 

  1. Name clause: This clause stays the name of the Private Limited Company and at the end of the company two-word "Private Limited" will be inserted. The name of the company should be unique and different from other companies.

 

  1. Domicile clause: The registered address of the Company is mentioned in this clause. The Private Limited Company only has to specify the state in which the office is located and not the full address. The Registrar and Court decide the jurisdiction with the help of this clause.

 

  1. Objection clause: This clause is the heart and soul of the MOA document. Many activities are listed in the objection clause. Any action that violates the objection clause and is not specifically stated in the MOA would be regarded as ultra vires, or outside the scope of the company's authority.

 

  1. Liability clause: This clause mentions the liability of each member of the company. In case a Private Limited Company is formed as a company limited by shares, then the members are liable for the shares they have purchased. In case of a Private Limited Company is formed as an unlimited company, then the liability of members is unlimited.  The liability of the members is limited by the amount each member has agreed to contribute, in the case of a Private Limited Company formed as a company limited by guarantee.

 

  1. Capital clause: This clause is also known as the nomial/ authorized capital. The maximum amount of capital that a company may raise is specified in this clause. This also explains why the capital was divided into a certain number of shares with a fixed amount.

 

  1. Subscription clause: This clause includes the information regarding the company's initial subscribers. It also includes names, signatures, addresses and other information of the subscribers.

 

 Conclusion 

 

It is advised to every company to have a MOA because it outlines the parameters of the functioning of the company. The MOA helps the Private Limited Company and owners to run the business smoothly and effectively. It is submitted to the Registrar of the Companies alone with SPICe+ form.  

 

            

 

 

 

 

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