MOA and AOA

What it means

The Memorandum of Association (MOA) is a company’s charter. It tells the outside world who the company is and what it can do: its name, the state of its registered office, its business objects, the liability of members and its authorised capital. The Articles of Association (AOA) are the company’s internal rulebook: how shares are issued and transferred, how directors are appointed, how meetings are held and how decisions are taken.

How it works

Both are prepared at incorporation and filed online with SPICe+ as e-MOA (INC-33) and e-AOA (INC-34). Standard formats are given in the schedules to the Companies Act, 2013, and can be adapted.

• MOA clauses: name, registered office state, objects, liability, capital and subscription.

• Changing the name: special resolution plus approval from the Central Government (through the ROC).

• Changing the objects: special resolution, filed in MGT-14 within 30 days.

• Shifting the registered office to another state: special resolution and Regional Director approval.

• Increasing authorised capital: ordinary resolution if the AOA permits, filed in SH-7 within 30 days with stamp duty.

• Altering the AOA: special resolution, filed in MGT-14.

Example

A startup was incorporated with authorised capital of ₹10,00,000, divided into 1,00,000 equity shares of ₹10 each, and an object clause covering software development. It now wants to issue shares to an investor and start selling hardware.

1. New capital needed: ₹25,00,000, that is 2,50,000 shares of ₹10 each. The increase is ₹15,00,000.

2. Shareholders pass a resolution to increase authorised capital and alter the capital clause; SH-7 is filed within 30 days with the ROC fee and stamp duty on the ₹15,00,000 increase.

3. A special resolution (at least 75% of votes cast in favour) adds hardware trading to the object clause; MGT-14 is filed within 30 days.

4. Only after both are approved can the company allot the new shares and begin the new activity.

Key points to remember

• A company cannot validly do business outside its objects, so draft the object clause broadly enough at the start.

• Investors usually want investor protection rights written into the AOA before they invest.

• Keep an updated, certified copy of the MOA and AOA; banks ask for them when opening accounts and sanctioning loans.

• Missing the 30-day filing window attracts additional fees.