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MOA & AOA Amendments
Memorandum of Association (MOA) and Articles of Association (AOA) are charter documents of companies. They lay the foundation upon which a company operates. Finalization of MOA and AOA takes place at the time of incorporation of a company. However, as companies grow, MOA and AOA can become restrictive to the companies’ operations. Therefore, a need to amend the clauses of MOA & AOA would arise. Here’s everything you need to know about MOA and AOA of the company and how the amendments can be carried out in the same.
Memorandum of Association lays down the constitution of the company. It is a charter document that defines the purpose and scope of activities to which the company confines. This makes MOA override AOA ie., the clauses of AOA cannot authorize something beyond the boundaries laid down by MOA. The relevant contents of the MOA are laid down under the provisions of Section 4 of the Companies Act, 2013.
Clauses of MOA
The following clauses form part of the format of MOA of the company:
Name Clause: The name of the company is specified by this clause. If the company is a private company, then the words “Private Limited” shall be added after the name of the company. While in the case of a public company, the word “Limited” shall be added. Section 4(2) of the Companies Act, 2013 lays down explicit provisions w.r.t. the name of the company.
Registered Office Clause: This clause shall specify the state in which the registered office of the company is situated. This determines the jurisdiction of the Registrar of Companies (ROC).
Object Clause: This clause specifies the object for which the company is formed. The object clause can be divided into main objectives, incidental objectives, and other objectives. Further, the matters and activities that are necessary for the furtherance of the objects of the company are also specified in this clause.
Liability Clause: The liabilities of the members of the company are specified in this clause. The liability clause can specify any of the following:
Limited by shares: Here, the liability of the members is limited to the amount unpaid on the shares held by them.
Limited by Guarantee: Here, the liability of the members is restricted to the amount undertaken to be contributed by the members of the company in the event of winding up of the company towards payment of debts and liabilities, the cost and expenses associated with winding up of the company and for the adjustment of rights of the contributories.
Unlimited company: Here, the liability of the members of the company is unlimited.
Capital Clause: This clause specifies the amount of capital that can be raised by the company. This clause states the amount of authorized share capital, the value of each share, and the number of shares that each subscriber to the memorandum has agreed to subscribe to.
Further, in the case of One Person Company, the memorandum shall also specify the name of the person who shall become the member of the company in the event of death of the subscriber.
The Articles of Association set out the rules and regulations for governing, management, and administration of the company. It is binding to the present as well as all the future members of the company. It binds the company to the members, members to the company and members among themselves. Section 5 contains the necessary provisions with respect to the articles of association.
Common Clauses For Articles of Association
Articles of Association is a detailed charter document covering most of the aspects. The Companies Act, 2013 provides various tables that companies can adopt as their AOA. These tables include:
Table |
Applicable For |
---|---|
Table F |
Company limited by shares |
Table G |
Company limited by guarantee having a share capital |
Table H |
Company limited by guarantee not having a share capital |
Table I |
The unlimited company having a share capital |
Table J |
The unlimited company not having share capital |
The following are the major areas governed by an AOA:
Share Capital
Lien of Shares
Calls on Shares
Transfer of shares
Transmission of shares
Forfeiture of Shares
Dividends
Reserves
Accounts and Audits
General Meetings
Conversion of shares to stock
Capitalization of Profits
Buyback of Shares
Alteration of Capital
Voting Rights and Proxy
Board Meetings
Key Managerial Personnel
Borrowing Powers
Winding Up
It is to be noted that the Companies Act, 2013 overrides the MOA and AOA. In case of contrary provisions, the Act shall prevail. Also, any provision of the MOA, AOA, or any agreement or resolution to the extent that it is repugnant to the provisions of this act shall be void.
Amendment Procedure
The process of MOA amendments varies depending upon the clauses that are to be altered:
Change in Name: For altering the name of the company, a special resolution needs to be passed in the general meeting of the company. The application for a change in name shall be filed in Form INC-24. Any change in name shall comply with the requirements specified under sub-section (2) and (3) of section 4 and shall not have any effect unless approved by the Central Government in writing. However, if the change pertains to the addition or deletion of the word ‘Private’ due to change in the class of the company (i.e, conversion of private limited company to a public limited company or vice-versa), then the approval of the Central Government shall not be required.
After the change, the registrar shall enter the new name of the company in the register of companies and issue a fresh certificate of incorporation.
Change in Registered Office: Form INC-23 is the MOA amendment form through which an application for change in the registered office of the company can be made. If the registered office of the company is shifted from one state to another state, then the change shall not have an effect unless it is approved by the Central Government.
On application, the Central Government shall check and satisfy as to the consent of the creditors, debenture holders, and other stakeholders of the company or that the company has made sufficient arrangements for the due discharge of debt and obligations or has provided adequate security for the same. The Central Government shall dispose of the application within 60 days.
The company shall file with the registrar, the special resolution and order of the Central Government for change in registered office. In case of change from one state to another, the above documents shall be filed with the ROC of both states.
Change in Objects of the Company: A company that has raised money from the public through prospectus and has any unutilised amount out of the money so raised, shall not change its objects for which the money was raised unless the following requirements are met:
A special resolution is passed by the company
The details of such resolution shall be published in one English and one vernacular newspaper circulating in the place where the registered office of the company is situated. The details shall also be placed on the website of the company.
The dissenting shareholders shall be given an opportunity to exit the company.
The registrar shall register the alteration in the objects and certify the registration within 30 days of filing the special resolution.
The AOA amendment procedure is similar to MOA amendment procedure. Following is the process of alteration of MOA and also AOA of the company:
While MOA and AOA of the companies are charter documents, both are distinct from each other and serve distinguished purposes. Following are the differences between MOA and AOA:
Hierarchy: MOA is subordinate to the Companies Act, 2013 while AOA is subordinate to both the MOA and Companies Act, 2013.
Purpose: MOA lays down the fundamental information of the company that includes name, registered office, capital, objects, etc. while the AOA lays down the rules and regulations for management and administration of the company.
Clauses: MOA contains 5 clauses while the AOA contains detailed rules and regulations and is not limited to a fixed number of clauses or provisions.
Filing at time of Incorporation: It is mandatory to file MOA with the registrar at the time of incorporation of the company. However, while AOA is also drafted at the time of company incorporation, it is not necessary to file the same.
Retrospective Amendment: MOA amendments cannot be made retrospectively while AOA amendments can be made retrospectively.
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