Memorandum of Association – The Company's DNA! 🧬
Pop quiz: What's the first question people ask when they meet you?
"What's your NAME?"
Then: "Where are you FROM?"
And: "What do you DO?"
MOA answers ALL these questions - but for a COMPANY!
What is MOA?
Memorandum of Association (MOA) is the company's CHARTER - the fundamental document that defines:
- Its identity
- Its boundaries
- Its powers
- Its very reason to exist!
Legal speak: "The charter of the company, defining the scope of its activities and its relationship with the outside world."
Simple speak: "Company's Aadhar Card + Passport + Degree Certificate combined!" 📜
Why is MOA SO Important?
The Doctrine of Ultra Vires ("Beyond Powers")
Latin: Ultra (beyond) + Vires (powers) = Acting beyond legal authority
What it means: If a company does ANYTHING not mentioned in MOA → ILLEGAL!
Real Drama - The Ashbury Railway Case (1875):
Company's MOA said: "We make railway carriages and wagons" 🚂
What they did: Gave a loan to build railway lines in Belgium! 💰
Shareholder sued: "Hey! That's NOT in the MOA!"
Court verdict:
"The directors exceeded their authority. The contract is VOID (null and void)!"
Result: Company lost the money! Directors couldn't even ratify (approve) it later!
Lesson: MOA = Company's boundary wall. Cross it = Trouble! ⚠️
The 6 Sacred Clauses of MOA
Think of MOA as a 6-chapter book about the company. Each clause = One chapter!
Clause 1: NAME CLAUSE – "What's Your Name?" 📛
What it contains: Company's official name
Rules:
Must end with:
- "Limited" (for Public companies) → TCS Limited
- "Private Limited" (for Private companies) → Flipkart Internet Private Limited
- "(OPC) Private Limited" (for One Person Company)
Must NOT:
- ❌ Be identical to existing company
- ❌ Resemble government agency (can't use "RBI", "SEBI" etc.)
- ❌ Use offensive words
Fun fact: Before finalizing, check RUN (Reserve Unique Name) on MCA portal!
Real Example:
- Tata Consultancy Services Limited ✅ (Public Co.)
- Zomato Media Private Limited ✅ (was Pvt Ltd before IPO)
Name Changes in History:
- Facebook → Meta Platforms Inc. (2021)
- Google → Alphabet Inc. (2015)
(Each required MOA amendment!)
Clause 2: REGISTERED OFFICE CLAUSE – "Where Do You Live?" 🏢
What it contains: State where registered office is located
Why it matters:
- Determines which Registrar of Companies (ROC) has jurisdiction
- Tax jurisdiction
- Legal notices sent here!
Example:
"The registered office of the company will be situated in the State of Maharashtra."
Note: Exact address NOT in MOA (that's in incorporation forms). Just the STATE!
Real story:
- Flipkart: Registered in Karnataka (Bangalore) → Karnataka ROC jurisdiction
- Reliance: Registered in Maharashtra (Mumbai) → Maharashtra ROC
Can you change states? YES, but requires:
- Special resolution
- Central Government approval (if capital > ₹5 crores!)
- Major hassle! 😅
Clause 3: OBJECTS CLAUSE – "What Will You DO?" 🎯
THE MOST IMPORTANT CLAUSE!
What it contains:
- Main objects (primary business)
- Ancillary objects (supporting activities)
- Other objects (future possibilities)
Why crucial? Ultra Vires doctrine! Company CAN'T do anything outside this!
Real Example - Reliance Industries:
Main Objects:
- "To carry on business of petroleum refining, petrochemicals, polyester..."
Ancillary Objects:
- "To acquire land, buildings, machinery..."
- "To borrow money, issue bonds..."
Other Objects:
- "To engage in retail business..."
- "To provide telecommunication services..." (This allowed Jio! 📱)
Pro tip: Draft BROADLY!
Smart move: "To carry on any other business as the company may deem fit"
(Many companies add this catch-all phrase!)
Bad example: "To sell only Samsung phones" (What if you want to sell OnePlus tomorrow? MOA amendment needed! 😓)
Good example: "To engage in mobile phone retail and related electronics" (Room to grow! ✅)
Clause 4: LIABILITY CLAUSE – "How Much Can You Lose?" 💸
What it states: Shareholders' liability is LIMITED to unpaid amount on shares
Example clause:
"The liability of members is limited to the amount unpaid on shares held by them."
Meaning:
- You bought 100 shares @ ₹10 each = ₹1,000
- Paid only ₹600 (₹400 unpaid)
- Company fails with ₹10 crore debt
- Your liability: Only ₹400! (Not ₹10 crore!)
Real case:
- Yes Bank crisis (2020): Share went from ₹400 → ₹15
- Shareholders lost investment
- But NOT personally liable for bank's ₹50,000 crore crisis! 🛡️
Clause 5: CAPITAL CLAUSE – "How Much Money?" 💰
What it contains:
Authorized (Nominal) Capital: Maximum capital company CAN raise
Example:
"The Authorized Share Capital of the company is ₹10,00,00,000 (Rupees Ten Crores only) divided into 1,00,00,000 (One Crore) equity shares of ₹10 each."
Key terms:
Authorized Capital: Permission limit (like credit card limit!)
- Reliance: ₹6,00,000 crore authorized! (Massive!)
Issued Capital: Actually offered to public
- Reliance might issue only ₹2,00,000 crores
Subscribed Capital: What public actually bought
- ₹1,80,000 crores subscribed
Paid-up Capital: What company actually received
- ₹1,80,000 crores paid by shareholders
Can you increase authorized capital? YES!
- Pass ordinary resolution
- Pay additional fees to ROC
- Amend MOA
Zomato's IPO (2021):
- Authorized capital increased before IPO
- Issued ₹9,000 crore shares to public!
Clause 6: ASSOCIATION/SUBSCRIPTION CLAUSE – "Who Started This?" ✍️
What it contains:
- Names of subscribers (initial members/promoters)
- Their signatures
- Number of shares they take
Looks like:
| Name | Address | Occupation | Shares Taken | Signature |
|---|---|---|---|---|
| Ramesh Kumar | Mumbai | Businessman | 10,000 | [Signed] |
| Priya Shah | Delhi | Engineer | 5,000 | [Signed] |
Minimum subscribers:
- Public Company: 7 persons
- Private Company: 2 persons
- OPC: 1 person + 1 nominee
Declaration:
"We, the several persons whose names and addresses are subscribed, are desirous of being formed into a company... and we agree to take the number of shares set opposite our names."
Real fact: These first subscribers = Founder shareholders!
Flipkart example:
- Sachin Bansal & Binny Bansal were original subscribers
- Each took equal shares initially
- Their signatures on MOA = Company birth! 🎂
MOA in Action - Real Story
The Tata Teleservices Drama:
Background: Tata Teleservices was in telecom business
2017: Wanted to shut down telecom, sell spectrum to Airtel
Problem: MOA said telecom is MAIN object!
Question: Can they exit their main business?
Solution:
- Called Extraordinary General Meeting (EGM)
- Passed special resolution to alter MOA
- Changed main objects
- Got shareholder + court approval
- Then sold spectrum
Without MOA amendment? Ultra Vires = Illegal! ⚖️
Altering MOA - Can You Change It?
Answer: Mostly YES, but it's TOUGH!
What you need:
For Name: Special resolution (75% votes) + ROC approval
For Registered Office (changing state): Special resolution + Central Govt approval
For Objects: Special resolution + court approval (if objectors protest!)
For Capital: Ordinary resolution (50%+)
Liability & Subscription Clauses: Almost IMPOSSIBLE to change!
MOA vs Articles of Association - The Eternal Confusion! 🤔
| MOA | AOA |
|---|---|
| Constitution | Bylaws |
| WHAT company can do | HOW it will do |
| External (public sees) | Internal (members see) |
| Harder to change | Easier to change |
| Mandatory for ALL companies | Optional for some |
| Ultra Vires doctrine applies | No Ultra Vires |
Analogy:
- MOA = India's Constitution (framework, powers, restrictions)
- AOA = Parliament's Rules of Procedure (how to function day-to-day)
Quiz Time! 🎯
Test Your Knowledge
Question 1 of 6
1. MOA stands for:
💡 Final Wisdom: "MOA is like your degree certificate - it defines WHAT you can do (engineer/doctor/CA). AOA is like your job description - HOW you'll do it daily. Company without MOA = Human without identity!" 🎓✨
Next up: Articles of Association (AOA) - The company's operating manual! 📖