MoA and AoA: the two documents that define a company

Under section 4 of the Companies Act, 2013 the memorandum has six clauses:

1. Name clause. The name, ending in Private Limited, Limited, or for a one person company (OPC) Private Limited.
2. Registered office clause. The state in which the registered office is situated. The full address is filed separately and can change within the state without touching the memorandum.
3. Objects clause. The objects for which the company is formed and matters considered necessary to further them. The company cannot lawfully act outside them.
4. Liability clause. That members’ liability is limited to the unpaid amount on their shares, or to the amount guaranteed.
5. Capital clause. The authorised share capital and its division into shares of a fixed amount.
6. Subscription clause. The first subscribers, the shares each takes, and for an OPC the nominee.

The model forms are Tables A to E of Schedule I, by type of company. For companies incorporated online it is generated as the e-memorandum in Form INC-33 and signed digitally by the subscribers.

The articles, under section 5, are the company’s internal rulebook: issue and transfer of shares, calls and forfeiture, alteration of capital, general meetings and voting, appointment, powers and removal of directors, board meetings and quorum, borrowing powers, dividends, accounts, the seal, and winding up. Tables F to J of Schedule I are the model articles; a company may adopt them wholly, partly, or exclude them and write its own. Online incorporations use the e-articles in Form INC-34.

A private company’s articles must, by definition under section 2(68), restrict the right to transfer shares, limit the members to 200 and prohibit any invitation to the public to subscribe for its securities.

Both are public documents on the MCA register. Anyone dealing with the company is taken to know their contents, but is entitled to assume that internal procedures were followed.

• Share transfer: a right of first refusal for existing shareholders, and the board’s power to refuse a transfer to a competitor.
• Vesting and leaver provisions for founders, so that a departing founder does not keep a full stake.
• Tag-along and drag-along rights for a sale of the company.
• Reserved matters that need a special majority or an investor’s consent: new share issues, borrowings above a limit, related-party deals, change of business.
• Board composition, nomination rights, quorum and the casting vote.
• Pre-emption on new issues and the treatment of different classes of shares.
• Entrenchment under section 5(3), where a clause should be changeable only by a higher majority than a special resolution; it must be notified to the Registrar.

A shareholders’ agreement that contradicts the articles is unenforceable against the company on the points of conflict, which is why investors insist the articles are amended to match at every round.

Every copy of the memorandum and articles issued after an alteration must carry it, and the fee and stamp duty on an increase in capital are computed on the increase. Our event-based ROC filing service drafts the resolutions and files the forms.