MoA Amendment

Introduction:

The company’s charter outlines the scope of its activities, which is defined by the memorandum of association. The Memorandum of Association outlines the company’s relationship with the members’ rights and interests as well as the company’s relationship with the members. Any company that wishes to change its Memorandum and Articles of Association must follow the provisions of the Companies Act, 2013 and the rules promulgated thereunder. [1]The Company has the ability to change its MOA in any way it sees fit, including through modification, alteration, substitution, deletion, and other means. A company’s registered office can be moved from one state to another by passing a special resolution, which must be approved by the Company Law Board. The modified MoA must be submitted with all existing states as well as the shifted state. Changes are frequently made to improve the business’s professionalism and profitability, as well as to expand the company’s operations in its existing location or to merge with another company or person. This corresponds to sections 17 and 21 of the Companies Act, 1956 and section 11(4) of the Indian Companies Act, 1913 and section 18(1) of the English Companies Act, 1948.

Meaning of MOA

The Memorandum of Association (MOA) is a legal document that describes the scope of the company’s commercial activities as well as information about the company’s holdings. The Memorandum of Agreement (MoA) is a document that is written as part of the company registration process. It is sometimes referred to as the company’s charter, while other times it is simply referred to as a memorandum. The MOA must be registered as a ROC Compliance in most countries, which contains articles such as MGT-7 and AOC-4 in India. The Ministry of Corporate Affairs (MCA) has introduced online filing for company registration in an effort to make company formation in India more compliant.[2]

Importance of MOA

• Determines the operation’s scope.

It outlines a variety of activities that a company can engage in. Any other operation will be null unless it is on this list.

• Determines the company’s relationship with outsiders.

This document’s main goal is to provide important information to shareholders, creditors, and other stakeholders. It exemplifies the breadth and strength of the enterprise.

• The company’s charter is set.

The memorandum of association serves as the company’s fixed charter (as per section 16 of the Companies Act).

• Incorporation basis

In order to be incorporated, you must file a memorandum of association with the registrar of businesses. In the event of a public corporation, it must be signed by at least 7 people, and in the case of a private company, it must be signed by at least 2 people.

Particulars to be Mentioned in the MOA

Memorandum of Association (MOA) includes six different clauses as mentioned below:[3]

• Name Clause
• Domicile Clause
• Objects Clause
• Liability Clause
• Capital Clause
• Subscription Clause

Name Clause

The company’s name is its first and most distinctive identifier. As a result, the memorandum’s name clause contains the company’s real, legal, and approved name. Firm names should not be too similar to those of another company that has a similar name because many times these companies employ a Trademark Registration procedure to protect their names.

Domicile Clause

The domicile clause includes all relevant information about the company’s registered office. It contains the name of the state or union territory where the registered office is located, as well as the address of the office, which may or may not be correct. It also lists the names of the registrars who have signed up.

Objects Clause

The reason for the company’s formation was indicated in the object clause. Companies are not permitted to engage in any other type of business than that which is clearly indicated in this article. The following should be included in an object clause:

• A list of the primary goals that the company will pursue after it is formed.
• Objects that aren’t directly related to the main goal yet are required to achieve it
• Any additional or incidental objects that aren’t included in the primary objects
• Nothing that is illegal or harmful to the public good
• Nothing that would be considered a violation of the country’s general rule of law.

Liability Clause

The liability clause specifies the extent to which each of the company’s members is liable. If the corporation is limited by shares, each member’s liability is restricted to the face value of the shares that he or she owns. This provision must specify how much liability each individual company member bears if the firm is limited by guarantee. If the firm is limitless, this clause would not be included in the MOA.

Capital Clause

The capital clause contains information on the proposed company’s entire capital. The authorised capital of a firm is this amount. Companies are not allowed to accumulate more money than the approved capital level. The capital clause must also specify how the capital is divided into equity share capital and preference share capital. The MOA must specify the number of shares the firm invests in equity and preference share capital, as well as their value.

Subscription Clause

The subscription clause is the last and final clause in the Memorandum of Association. The subscription clause essentially lays out the shareholders’ motivations for forming the firm and specifies that the subscribers are consenting to buy stock in the company. It also reveals how many shares each subscriber has taken up. Everything is done in accordance with the MoA Subscriber Sheet’s specifications.

Process of Amendment

1. Convene a Board of Directors meeting with the goal of suggesting changes to the MOA and producing a resolution. Determine the date, time, and location for the Extraordinary General Meeting and send notice to all members 21 days before the EGM.
2. Pass a special resolution at the EGM and secure permission for a change to the company’s MOA.
3. Within 30 days of enacting the special resolution, submit the paperwork to ROC notifying the MOA Amendment.
4. The following papers must be submitted with the MOA Amendment to the Registrar: a certified true copy of the special resolution, a copy of the EGM notice, and a printed copy of the Altered Memorandum of Association.
5. Depending on government processes, filing a MOA Amendment with the ROC can take anywhere from 10 to 15 days.  [4]

Reason of Amendment

The business or purpose for which it was formed, as well as any other matters, deemed necessary in furtherance thereof. Any act by the company that goes beyond the objects and powers set forth in the Companies Act, 2013 is deemed hyper virus, making the object clause one of the most crucial clauses. The subscribers decide on the objects they want to pursue when they register a company, but if they want to change those objects after incorporation, they can do so by following the legal procedure outlined in Section 13 of the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014.[5]

Memorandum Subscription

The founding members of an entity must sign this Memorandum, which can be seven or more in the case of a Public Limited Company, two or more in the case of a Private Limited Company, and one in the case of a One Person Company. The procedure of attaching one’s signature or mark to a document for the approval or attestation of its particulars is known as subscribing to a memorandum.

Who can Subscribe to the MOA

The Memorandum of Association can be signed by the following people:

1. Individual non-resident Indians and foreign citizens
2. Minimalist (courtesy a natural guardian)
3. The Companies Act defines a company as one that is incorporated.
4. A company that was formed outside of India.
5. Limited Liability Partnership (LLP) is a society that is registered under the Society Registration Act of 1860.
6. A legal entity formed by an act of Parliament or a statute of a state legislature.[6]

Membership in the MOA

Every subscriber must add his signature, which must be witnessed by another person. This witness must write his or her name, residence, description, and occupation on a piece of paper. If the subscriber’s or witness’ signature is in a language other than English, an affidavit must be produced stating that the signature is the subscriber’s or witness’ actual signature. In some situations, the subscriber may delegate the signing of the document to another person by issuing a power of attorney to the person in question. In the presence of one witness, the subscriber or agent should write his or her name, address, description, and occupation. eMOA must be submitted with the Subscribers’ Digital Signatures under the new MCA form.[7]

Cases Related to MOA[8]

Kannada Nadu Education Society V. Karnataka Appellate Tribunal & Others [9]

 The petitioner has filed a return as provided under Section 13 of the Karnataka Societies Registration Act, 1960, the District Registrar accepted the return filed. Against that proceeding, 3rd respondent preferred an appeal before the Karnataka Appellate Tribunal, Bangalore. The Tribunal entertained the matter and allowed the appeal. The validity of this order is called into question in this writ petition.

 An appeal would lie to the Tribunal under Section 9(3) of the said Act. Section 9 pertains to alteration of memorandum of association. Sub-section (3) thereof is to the effect that if the Registrars refused to register a change in the memorandum under sub-section (2), an appeal shall lie to the Karnataka Appellate Tribunal within the period mentioned therein.

It is urged on behalf of the petitioner that it is not a case of alteration of memorandum of as- association at all and therefore, the Tribunal had no jurisdiction in the matter. However, the learned counsel for the respondent urges that the memorandum of association requires the names of the members of the governing body being mentioned to whom, by Rules, the management affairs is entrusted and therefore, it is part of the memorandum of association and hence, Section 9 of the Act is attracted. The scheme of the Act requires that memorandum of association should contain the name of the society, the object of the society, the names, addresses and occupations of the members of the governing body to whom, by the rules of the society, the management of the affairs is entrusted and the memorandum of association will have to be registered with the Registrar of the Societies.  That pertains only to the first governing body of the Society and not to the elections that take place thereafter and to any other person elected.

In the present case, what happened was as per Section 13 of the Act, the petitioner filed its return along with the balance sheet, the annual list of governing body and that was accepted by the District Registrar. It is brought to my notice by the learned counsel for the respondent that subsequently another list filed by the third respondent also has been accepted by the District Registrar. In the circumstances, it is submitted that there are two sets of office bearers in respect of the same society. If that is so, the parties have to work out their remedies else- were in an appropriate form. It is clear that proceedings arising under Section 13 is not the same as referral to Section 9 of the Act and therefore, the Tribunal has no jurisdiction at all in the matter. What could be considered under Section 9 is one of a change of memorandum of association approved under sub-section (1) to be filed with the Registrar and that pertains to the matters mentioned in sub-section. It does not cover the cases of change of office-bearers. Therefore it is obvious that the Tribunal had no jurisdiction to deal with such matter. Hence, the petition is allowed and the order of the first respondent in Appeal No. 352 of 1989, dated 4-1- 1991 vide Annexure-F is quashed.

Rule made absolute accordingly.

Conclusion

If the Company makes a substantial decision that necessitates amending the Memorandum of Association and Articles of Association, the procedure outlined in the  Act [10]must be followed. Today, in such a highly industrialized society, it is necessary to define the roles and functions of a company, because a company not only incorporates the interests of its members, but also serves the interests of its investors, shareholders, and creditors, making it necessary for a company to move toward its goal in a more professional and ethical manner. It is also critical to safeguard the interests of everyone who is directly or indirectly connected to the firm, which is why the notion of supra vires is so vital in dealing with mismanagement and preventing power abuse.

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References:

[1]https://cadivya.com/moa-amendment

[2]LegaRaasta. 2021. Memorandum of Association (MOA) In India |Available at: https://www-legalraasta-com.cdn.ampproject.org/v/s/www.legalraasta.com/memorandum-of-association/amp/?amp_js_v=a6&amp_gsa=1&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16270185554223&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.legalraasta.com%2Fmemorandum-of-association%2F

[3] TaxGuru. 2021. Process of Alteration In Memorandum of Association of Company-Available at: https://taxguru-in.cdn.ampproject.org/v/s/taxguru.in/company-law/process-alteration-memorandum-association-company.html?amp_js_v=a6&amp_gsa=1&amp&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16270178806647&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Ftaxguru.in%2Fcompany-law%2Fprocess-alteration-memorandum-association-company.html

[4]Enterslice. 2021. Procedure for change in Alteration of MOA  [online] Available at: https://enterslice-com.cdn.ampproject.org/v/s/enterslice.com/learning/procedure-for-change-in-alteration-of-moa-and-aoa/?amp_js_v=a6&amp_gsa=1&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16270178806647&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fenterslice.com%2Flearning%2Fprocedure-for-change-in-alteration-of-moa-and-aoa%2F

[5]Avatar Singh. Business law.

[6] 2021. [online] Available at: https://www.indiafilings.com/memorandum-of-association-amendment

[7] Available at: www.lawteacher.net

[8]Available at: https://www.casemine.com/judgement/in/56ea75a5607dba36cc7461dd

[9]11 March 1991

[10] Companies Act, 2013