Alteration of MOA- Charter Documents of the Company

The preparation of a document called a memorandum of association is one of the first steps in the establishment of a corporation (hereinafter referred to as MOA). Also, the firm’s Memorandum of Association outlines the fundamental criteria on which the company was founded. However, every registered business should have a Memorandum of Association (MOA), which serves as the company’s charter. The Memorandum of Association, in general, governs the company’s external affairs, whilst the articles of association govern its internal structure. In addition, we will discuss the process of Alteration of MOA in this blog.

What is a Memorandum of Association (MOA)?

A company’s Memorandum of Association is a legal document that contains the basic information required for the company’s incorporation. Section 2 (56) of the Companies Act of 2013 defines the Memorandum of Association as-  MOA can only be drafted or revised in accordance with the provisions of the Act. Also, it is known as the Company’s Charter. However, Companies may need to make modifications to the company’s terms, which will necessitate a change to the Memorandum of Association. The name of the company, the physical address of the registered office, the names of the shareholders, and the distribution of shares are all outlined in the MOA.

Various Clauses of Memorandum of Association (MOA)

Section 4 of The Companies Act 2013 states some of the important or main clauses or MOA as follows;

• Name Clause: The name provision in a memorandum of association deals with the company’s name. In spite of this, a company’s name must be unique, legitimate, and original, according to this condition. Also, this means that the company’s name cannot be confusingly similar to an existing company’s name. Furthermore, the MCA (Ministry of Corporate Affairs) website makes it simple to check the availability of a name. Furthermore, any changes to the company’s current name necessitate a modification to the Memorandum of Association.

• Object Clause: This clause establishes the object for which the prospective business will include or the reason for why the company is forming. Thus, any changes to the company’s goal necessitate a change to the MOA’s objects clause.

• Capital Clause: The approved capital with which the firm is registered is included in this. Also, the number of shares of each sort and their face value is specified in the capital clause.

• Liability Clause: This section specifies the extent to which stockholders are responsible for repaying debt commitments if the company goes out of business. The article further specifies that no member can request to pay more than what is legally necessary.

• Registered Office Clause: The geographical location of the company should be stated in the Memorandum of Association filed with the ROC. Every registered company is in need to have a registered office, which serves as the company’s domicile and is also the location where the company’s statutory books must be kept and where notices and other communications can issue. Likewise, Within 30 days of incorporation, the ROC must receive a notice of the company’s exact condition.

Alteration of Name clause

If a firm wishes to change or modify its name, the Name Clause must alter as well. Section 13 of the Companies Act, 2013 governs the alteration of the name clause. Section 16 will, however, apply to a firm that wishes to correct its existing name. Accordingly, The ROC must be notified of the company’s name change. The new name will register with the Registrar of Companies, and a new Certificate of Incorporation will given. Furthermore, there are two methods for changing a company’s name:

• Obtaining prior clearance from the central government.
• By enacting a special resolution.

Also, a company’s name can’t change if it has any errors in any of the following:

Alteration in Object clause

If a firm wants to change its goal, it must update the objective clause. A company’s directors must publicize the specifics of the move in two publications. One print in the local language newspaper, and the other in the English language daily.

Alteration in Liability clause

The Liability Clause is changing to limit the Directors’ liability. Bypassing a special resolution, which is to file with the Registrar within 30 days, the liability clause can make limitless.

Alteration in Capital clause

Changes can do for any of the following reasons:

• Fully paid shares can convert to stock or vice versa.
• An increase in the company’s share capital through the issuance of new shares.
• Existing share consolidate into larger-valued shares.
• Unissued share are cancel.

Alteration in registered office clause:

If the firm wants to move its registration office, it must do so under Section 12 of the Memorandum of Association. The Registrar will then certify the registration within 30 days after any changes to the Memorandum with respect to the company’s objects has registering. Any such change in the Memorandum causes a company’s registered office to be transferred from one state to another.

What is the Process of alteration of the MOA of a company?

• Notice to Board Meeting: To pass a resolution, the board of directors must issue a notice of board meeting (BM). The notice is to send out at least seven days before the meeting date. However, this is command under section 173.

• Held board meeting: The directors at the BM must pass an ordinary resolution authorizing the procedure of changing the MOA. They must also decide on the Extraordinary General Meeting’s date, time, day, and location.

• Issuing notice for general meeting: EGM notice is to give at least 21 days prior to the actual date of the EGM. With the permission of at least a majority in number and ninety-five percent of the company’s paid-up share capital, an EGM can be convened on shorter notice. The notice must include the meeting’s location, date, day, and time, as well as a summary of the business for discussion at the EGM.

• Holding of EGM: Section 101 of the Companies Act of 2013 governs it. The shareholders will vote on a special motion to approve the Alteration of MOA at the EGM.

• ROC form filling: Finally, within 30 days of the resolution, the directors must file MGT-14 with the ROC. Including the following resolution’s attachments:
  • Explanatory Statement;
  • Certified Copy of the Resolution;
  • Copy of the Notice to Members;
  •  The amended Memorandum of Association in printed form.

Conclusion

Any company’s memorandum of association describes the scope of its activities that is necessary for the company’s incorporation. However, it is always advisable to seek professional advice because any such change in a company’s MOA is a very complicated and time-consuming operation that can only be carried out by a special resolution at a shareholder meeting.