CHAPTER 5

DEFINITION

AOA-Articles of association form a document that specifies the regulations for a company's operations and defines the company's purpose.

MOA-Memorandum of association a document resembling articles of association in the U.S. which in case of a company to be formed legally must be executed and filed to form the charter of the company.

Why is there need to lodge MOA

section 16(1)-company needs to lodge a complaint or appeal to registrar when there are charges in MoA, which is compulsory when there’s amendments. Once they have lodged, registrar will issue certificate of incorporation, and only then will the company acquire legal status of body corporate.

Importance

  • Memorandum of Association is mandatory during application for incorporation of company
  • Understanding company model and goals
  • Understanding risks when investing: shareholders powers and risks based on the MoA constitution

Contents in MOA

1) Name of clause- specifies the company's name

2) Registered office clause- specifies the name of the State in which the company's registered office is located

3) Object clause- stated why the company is being formed

4) Liability clause- specifies the liability of the company's members.

5) Capital clause- specifies the maximum amount of capital that a company can raise

Features of MOA

  • States the nature of business activities conducted by the company
  • Prepared by the promoters of the company
  • Signed by 7 people for public company, and 2 people for private company
  • Submitted to the registrar of companies for registration, for getting a certificate of incorporation
  • It is an unalterable (hard to change) as changes are made with great difficulty
  • A public document that can be inspected by any individuals
  • Any act done beyond the powers of the memorandum of association ultra vires the act

Construction of MOA

GENERAL RULE

  • must contradict the provisions of the act, unless the act expressly states otherwise

SECTION 33(1)

  • contract between the members
  • contract between the company and each member

Alteration of MOA

  • name
  • convertion from unlimited
  • convertion from private
  • object clause
  • share capital
  • alteration done by high court section 181