Memorandum of Association (MOA): Clauses and Importance
The Memorandum of Association is the constitutional charter of a company. It defines the company’s relationship with the outside world, sets the legal boundaries within which the company may operate, and is the document that gives the company its legal personality.
What Is the Memorandum of Association?
The MOA is governed by Section 4 of the Companies Act 2013. It is one of the two founding documents of a company - the other being the Articles of Association (AOA). The MOA is the supreme document: the AOA, board resolutions, and member decisions cannot override it. Any act of a company that falls outside the MOA is void.
The MOA is filed with the Registrar of Companies as e-Form INC-33 at the time of incorporation, along with the AOA (INC-34). Once filed, it becomes a public document - any person may inspect it.
The Six Clauses of the MOA
| Clause | Name | What It Contains |
|---|---|---|
| 1 | Name Clause | The full legal name of the company, including the mandatory suffix (Private Limited / Limited / OPC Private Limited) |
| 2 | Registered Office Clause | The state in India in which the registered office of the company is situated (not the full address - just the state) |
| 3 | Objects Clause | The main objects of the company and objects incidental or ancillary to the main objects - this defines what the company is legally authorised to do |
| 4 | Liability Clause | The extent of each member's liability: limited by shares, limited by guarantee, or unlimited |
| 5 | Capital Clause | The authorised share capital of the company and its division into shares of a fixed face value |
| 6 | Subscription / Association Clause | The names, addresses, and signatures of the subscribers to the MOA - minimum 2 for a private company, 7 for a public company, 1 for an OPC |
The Ultra Vires Doctrine
Any act of the company that falls outside the scope of the objects clause is termed ultra vires - beyond the powers of the company. Such an act is void in law and cannot be ratified by even a unanimous resolution of all shareholders. This is a fundamental constraint: the company simply has no legal capacity to perform ultra vires acts.
Draft the objects clause broadly
Because ultra vires acts are void and unratifiable, it is critical to draft the objects clause broadly enough to encompass all intended and foreseeable business activities. A narrow objects clause creates legal risk every time the business evolves. If you later need to add a new line of business, you must formally amend the MOA.
Creditors and third parties dealing with a company are assumed to have constructive notice of the MOA - they are treated as knowing the company’s objects. A contract signed by the company in furtherance of an ultra vires object is unenforceable against the company.
Altering the MOA
Name Clause
Requires a special resolution (75% of votes cast) and approval from the Registrar via Form INC-24. The altered name is effective from the date the RoC issues a new Certificate of Incorporation.
Registered Office Clause (state change)
Changing the state of the registered office requires a special resolution and approval from the National Company Law Tribunal (NCLT). The NCLT will consider the interests of creditors and employees before approving.
Objects Clause
Requires a special resolution and filing of Form MGT-14 within 30 days of the resolution. The alteration takes effect from the date of RoC registration.
Capital Clause
Increasing authorised share capital requires a special resolution and Form SH-7 filed within 30 days.
Format and Filing
The Companies Act 2013 prescribes model forms for the MOA in Tables A through E of Schedule I, corresponding to different types of companies (companies limited by shares, by guarantee, unlimited companies, etc.). Companies are required to adopt the prescribed form and may only add to it - they may not deviate from the structure.
Why the MOA Matters in Practice
- Banks and financial institutions often review the objects clause before approving loans or credit facilities - the intended use of funds must fall within the objects.
- Foreign investment (FDI) approval may be linked to the objects clause where sectoral caps apply.
- M&A transactions require both parties to verify that the proposed transaction falls within each company's objects.
- A company acting outside its objects clause has no legal protection against claims by shareholders or creditors arising from that ultra vires act.
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