The Memorandum of Association

1) What is a Company? – A Simple Explanation with

Creative Thinking

A company is not a human being, yet the law treats it like a person. It cannot eat,

walk, or speak like us, but it can own property, make contracts, and even be

punished by the court. A company is something that is created by law. It comes into

existence when it is registered under the Companies Act.

Why Can't a Business Just Be a Group of People?

If people do business without forming a company, it is called a partnership or sole

proprietorship. In those cases, the owners are personally responsible for all the

losses.

But when they form a company:

● The company itself is responsible, not the individuals.

● The company becomes separate from its owners.

2) Example to Understand:

Imagine three friends — Ali, Sara, and John — start a bakery.

If they don’t register a company, and the bakery catches fire, they have to pay from

their own pockets.

But if they register a company called “Sweet Crumbs Pvt Ltd”, the company is

responsible, not the friends.

Even though they run the bakery, the law sees “Sweet Crumbs” as a different

person.

3) Critical Thought: Is a Company Always

Good?

A company gives many benefits, like:

● Limited liability (owners don’t lose personal property)

● More trust from banks and customers

● A professional image

But it can also be misused. Some people hide behind the company to:

● Avoid taxes

● Escape from debts

● Do wrong things and not get caught easily

That’s why the law says: if someone uses a company for fraud, the court can “lift

the corporate veil”, which means the court will look behind the company and

punish the real people involved.

4) Why Does This Matter for the MOA?

Now that we know a company is like a person made by law, we must ask:

“What kind of person is it?”

This is where the Memorandum of Association (MOA) comes in.

It tells:

● Who the company is

● What work it wants to do

● Where it is based

● How much money it has

● What rules it will follow

The MOA is like the birth certificate and identity card of a company.

5) The Constitution Before Birth

If a company were a living being, the Memorandum of Association (MOA) would be

its soul defining what it is born to do, where it may go, and what it may never

become. It is not just a legal formality; it is a declaration of identity and intention. The

MOA, often considered a dry legal document, is in fact deeply philosophical — it

captures the "why" behind the company's existence. But how relevant is it in a

modern, fast-changing corporate world? Let’s explore.

6) Understanding the Basics — Through a

Common Man’s Eyes

1) Imagine you're a farmer. You want to start a company that processes organic

fruits. You go to a registrar, and they ask:

“What is your objective?”

“Where will you operate?”

“Do you have the right to borrow money?”

2) These questions are not just business formalities. They are the spirit of the MOA.

It is the document that tells the world what you can and cannot do. Without it, a

company is like a vehicle without a map or a contract without purpose.

3) The MOA consists of:

1. Name Clause

2. Registered Office Clause

3. Object Clause

4. Liability Clause

5. Capital Clause

6. Association/Subscription Clause

Each clause answers a foundational question: Who are you? Where are you from?

What do you want to do? How much can you risk? These are not just legal questions

— they are deep philosophical questions.

7) Creative Analogy: The MOA as a Personal

Life Plan

Let’s say the MOA is like your life plan as a student:

● Name Clause: Your name.

● Address Clause: Where you live.

● Object Clause: Whether you want to be a doctor, writer, or engineer.

● Liability Clause: How much responsibility you are willing to take.

● Capital Clause: What resources you have.

● Subscription Clause: The friends who agree to start this journey with you.

Now imagine if you said you want to be a doctor but then opened a pizza shop.

That's how serious deviation from the MOA is. Courts call this the “Doctrine of Ultra

Vires” — actions beyond what the MOA allows.

8) Critical Analysis:

1. The Object Clause

The Object Clause in the MOA was designed to protect investors by ensuring a

company sticks to its promises. However, in today’s world, businesses evolve rapidly.

A tech company might want to start a finance division or a healthcare wing. Is it fair that the MOA restricts them?

Case Law: Ashbury Railway Carriage Co. Ltd. v. Riche (1875) The House of Lords declared a contract void because it was beyond the company’s stated objects — even though the shareholders supported it.

This judgment, though historically important, now feels outdated. Why should a

company’s growth be shackled by words written on the day of its birth?

2. Legal Protection?

In theory, the MOA protects shareholders and third parties. But in practice, many

investors don’t read it. It's buried in jargon and clauses. Ironically, the very document

meant to build trust is often ignored or misunderstood. This raises the question:

Is the MOA still fulfilling its purpose in the modern era?

3. Flexibility in the 21st Century

Today, under the Companies Act, 2013 (India), companies can have a more flexible

object clause. A private company no longer needs to define separate main and

ancillary objects. This is a positive step — but does it dilute the identity of a

company? If everyone is allowed to do everything, are we losing clarity?

9) Philosophical Reflection: Identity vs.

Adaptability

1) There is a thin line between consistency and rigidity. The MOA tries to ensure a

company stays true to its word. But businesses — like people — must evolve.

If Steve Jobs had stuck to Apple’s original MOA, there would be no iPhones today.

2) This leads to a larger question: Should law reflect permanence or permit

evolution?

A company should not lie about its intentions — but it should be allowed to change

its path responsibly. The MOA, therefore, must be a foundation, not a prison.

10) Suggested Reforms and Final Thoughts

● Introduce plain-language MOAs for small businesses and startups.

● Permit automatic expansion clauses for certain sectors (like tech and R&D).

● Make MOA reading mandatory before major investment decisions.

The Memorandum of Association, when viewed with creative eyes, is not a burden of

law — it is a compass of purpose. It is not for lawyers alone, but for dreamers,builders, and believers.

11) Conclusion:

1) The Memorandum of Association is a powerful document — it gives a company

life, meaning, and direction. A company is not a statue carved in stone; it is a living

entity in a dynamic world.

2) As a student, as a citizen, and as a potential entrepreneur, I see the MOA not just

as legal paperwork but as a declaration of vision. It should never be eliminated, but it

must be allowed to breathe, evolve, and adapt — just like the people who create it.