Definition of Memorandums of Association
A Memorandum of Association (MOA), also known as a company memorandum, is a legal document which is created during the formation and registration process of a company which is based in Singapore as well as certain other countries. A company uses a MOA to define its relationship with shareholders. A MOA can be accessed by the public and states important details related to the company. The company’s MOA and the Articles of Association combine to serve as the constitution of the company. Countries in which it is a legal requirement for a company to use a MOA include many European countries such as the United Kingdom, the Netherlands, and France. Certain Commonwealth nations, of which Singapore is one, also require the use of a MOA. A MOA includes information such as the identity of its shareholders, the distribution of the company’s shares, the legal name of the company, the physical address of the company’s registered office, the business objectives of the company, the liability of the company’s shareholders, the company’s authorized share capital, and the method by which the company was formed.
Why Memorandums of Association Are Necessary
Memorandums of association of Singapore companies form a portion of the constitutions of such companies. Therefore, those who plan on incorporating a Singapore company require one. The Singapore Companies Act specifies certain details which are directly related to company constitutions of Singapore companies. It states that a company constitution is a legal requirement that must be fulfilled during the incorporation of a new Singapore company. The constitution of a Singaporean Company can be designed and modified to best suit a company’s operations.
MOAs should be created in such a way as to give the owner of the company greater flexibility and certainty with regard to the running of the company. A well-crafted MOA allows a business owner to have greater control over the company as time passes.
When a company drafts a MOA, there are certain key points which must be taken into account. One of these relates to the business objectives of the company. These must be explicitly stated at some point in the MOA. The company’s decision-making structure is also to be mentioned, especially if the owner of the company plans to utilize a specific structure which is not commonly used. Doing so ensures the legal compliance of the company and also prevents any potential conflicts from taking place. Certain companies might also have unusual or specific rules and regulations which may be unique to them. If such is the case, it ought to be mentioned in the MOA and the constitution of the company. Doing so will bring the company in line with the legal and compliance regulations of Singapore.
Having a well thought-out MOA can ensure that a company will not be set up with any irrelevant rules or incorrectly classed shares. This will in turn save the company from the cost of expensive legal fees in case of any legal conflicts. A MOA and constitution may also bs used to correct the balance of power between owners, shareholders, directors, and management if a power struggle has been taking place within the company. For example, a shareholder may be enabled through a MOA to call for the overturning of decisions made by the directors of the company.
Changing of a Memorandum of Association
If circumstances take place in such a way that a change of the company’s MOA is required, it can be altered but only by way of a special resolution. This is usually not recommended, but if it needs to be done it has to be done. The alteration will be a part of the original MOA and therefore the company’s constitution from the date of the passing of the special resolution. The company will then be required to submit a notice of the resolution or any court order that has direct relevance to the constitution within a period of 14 days of such resolution of the order to the Accounting and Corporate Regulatory Authority (ACRA). Once this has been done, ACRA will issue a certificate of incorporation which serves as a confirmation of the alteration.
A MOA is part of a company’s constitution which defines the scope of the activities that a company in Singapore is to carry out. It serves as the foundation for the company to conduct business activities. For this purpose, we recommend that you use our services at Paul Hype Page & Co. We can assist you with the creation of your company’s constitution so that your company will receive excellent results and many benefits.