Memorandum and Articles of Association: Key Features and Functions.

Memorandum of Association (MOA):

The memorandum of association is a critical document for a company due to the following reasons:

Basis of Incorporation:

It serves as the foundational document for the company's establishment.

Determination of Areas of Operation:

It outlines the specific areas or purposes for which the company is incorporated.

Definition of Company's Relationship with Outsiders:

It defines how the company interacts with external parties and stakeholders.

Unalterable Charter (with Special Circumstances):

Generally, the MOA is unalterable, but under special circumstances and legal procedures, it can be amended.

Purposes of Memorandum of Association:

(i) Informing Prospective Shareholders:

Prospective shareholders understand the purpose for which their investment is used and the risks associated.

(ii) Guidance for Outsiders:

External parties dealing with the company gain certainty about the company's objectives and whether their contracts align with the company's objectives.

Contents of the Memorandum of Association:

Clause I: The Name

The company's name establishes its identity and must comply with legal requirements. For public companies, it should end with "Public Limited Company," and for private companies, it should include the word "Limited."

Legal Provisions: Read ss.34 & 112 of the Companies Act.

Clause II: Registered Office

Specifies the company's registered office, where communications and notices can be addressed.

Legal Provisions: Read ss. 14(3), 110 &111 of the Companies Act.

Clause III: Objects of the Company

Defines the company's sphere of activities, aims, and the kind of business it intends to undertake. Alteration of objects is subject to legal provisions.

Legal Provisions: Read s.8 of the Companies Act on alteration, sections 35 & 36 on ultra vires.

Clause IV: Liability Clause

Specifies whether the company's liability is limited or unlimited. If limited, it clarifies whether it is by shares or by guarantee.

Legal Provisions: Read s.4 (2) & (3) of the Companies Act.

Clause V: Capital Clause

States the registered capital amount, divided into shares of fixed value.

Clause VI: Association Clause

Subscribers express their desire to form a company, agreeing to take the specified shares.

Legal Provisions: Read ss.4, 5 & 12 of the Companies Act.

Conclusion:

The MOA plays a crucial role in defining the company's identity, purpose, and relationships. It ensures transparency for shareholders and external parties, laying the groundwork for the company's operations. Legal provisions, such as those outlined in sections 4, 5, 12, 34, 112, 14(3), 110, 111, 8, 35, and 36 of the Companies Act, provide the framework for creating and amending the MOA.