Memorandum of Association (MoA)

  • MoA is very basic document of company. MoA can be compared with constitution and AoA with Acts or Rules of country.
  • MoA contains name clause, objectives clause, major functions clause and capital arrangement clause etc.
  • As per Section 2(k) of Nepalese Companies Act, memorandum of association is memorandum of association.
  • MoA is the 1st important document to be filed for incorporation.
  • It is a charter or constitution of company as it regulates the relationship of company with the outsider stakeholders.
  • Name of company, Powers, objects and scope of operation of company are major elements of memorandum of association. That is actually essential element of memorandum of association.
  • Lord Cains, observation regarding MoA is “ the memorandum is as it were the area beyond which the action of company cannot go; inside that area the shareholders may make such regulations for their own governance as they think fit. (Ashbury Rail Carriage & Iron Company V. Riche 1875 LR 7 HL 653) .
  • MoA is a public document, the person who deals with company is presumed that s/he has sufficient knowledge regarding contents of memorandum.
  • Egyptian Salt & Soda Co. Ltd. v. Port Said Salt Association Ltd. 1931 AC 677 – “a memorandum of association is a document which sets out the constitution of a company and as such it is really the foundation on which the structure of company is based. It defines its relation with outside world and scopes its activities. Its purpose is to enable shareholders, creditors and those who deal with company to know what is permitted range of enterprises.’’
  • MoA is needed at the time of incorporation of company.
  • Name clauses, objects clauses, main functions, provisions of capital etc. must be stated in MoA.
  • The matters to be stated in MoA have been clearly mentioned in Section 18(1) and 18(2) of Nepalese Company Act.