One of the most important documents related to any company is its company memorandum, also known as its Memorandum of Association (MOA). A company's MOA combines with its Articles of Association to form its constitution, the fundamental document which regulates the running of the company.
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.
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Rules Related to Memorandums of Association
Any business entity which has been established by one or more entrepreneurs must comply with the contents which have been stated in its memorandum of association. A company’s MOA should be able to be accessed on its official website. When the company is being established, the owners must audibly read the MOA at least once. While doing so, they must specify the following information: the name of the company, the domicile of the head office of company, the company’s business activities, the objectives and purposes of the company, the details of the shares of the company, the details of the company’s general meetings of shareholders, and the details of appointments of members of the board of directors and board of commissioners.
There are also many other rules which must be followed by a Singaporean company. These rules are usually mentioned in the company’s constitution.
How Memorandums of Association Benefit Singaporean Companies
Memorandums of Association provide many different benefits to companies across Singapore. For example, the MOA will include certain information about how the company name was selected. Therefore, this prevents people from becoming confused by or misled about the purpose of the company through its name. The rules regarding shareholders and their shares are also defined in the MOA. Therefore, when there is a problem related to the shareholders, the MOA can be used to solve it. In this way, no issue that occurs in the company which concerns its shares will ever remain unsolved. Another benefit relates to the appointment of the directors and commissioners. The MOA defines how many directors and commissioners must be in a company, their minimum age, and their liabilities. Whenever one or more directors show negligence towards their responsibilities, then the director can be dismissed upon the request of the members of the board of directors in accordance with the company’s MOA.
Therefore, many problems can be solved if the company’s MOA is properly followed. This shows just how truly important an MOA is to any company based in Singapore.
Memorandums of Association in Singapore FAQs
In what instances are actions related to Memorandums of Association invalid?Tiwi2020-07-03T11:56:26+08:00
Singapore’s Companies Act mentions the instances in which a company’s actions related to its Memorandum of Association may be rendered invalid. It states that the actions of a company as specified in its Memorandum of Association can be deviated from only to the extent permitted by the Companies Act. Therefore, if a company performs an action or enters into a contractwhich its Memorandum of Association forbids,theaction or contract in question is deemed to be void and therefore not legally binding on the company.However, if the company chooses to alter the Articles of Association or Memorandum of Association, an invalid action or contract could be made valid; however, such instances are extremely rare.
Must foreign-owned companies based in Singapore have Memorandums of Association?Tiwi2020-07-03T11:56:10+08:00
All foreign-owned companies based in Singapore are to have Memorandums of Association. This fact is stated in the Companies Act. The Companies Act also requires every foreign company in Singapore to notify the Registrar of Companiesif there are any changes made to its charter, statutes, Memorandum of Association,Articles of Association,or any other information which may have been submitted tothe Registrar. If any other important information such as personal details of directors, the company’s name, or the company’s address is changed as well, the Registrar must also be notified.
Do all Singaporean companies require Memorandums of Association?Tiwi2020-07-03T11:55:44+08:00
Allcompanies based in Singapore requireMemorandums ofAssociation. This is because companies in Singapore’s range of powers and business activities are informed by their Memorandums of Association. In Singapore, a company is legally permitted to undertake any business activity as well as enter into any transaction.However, a company may choose to restrict its powers by stating its objectives underpinning the incorporation of the company aswell as a list of the powers thatmay be exercised by the company towards achieving those objectives in its Memorandum of Association. If it does so, the company’s legal powers will be defined by what has been stated in its Memorandum of Association.