Main Clauses of Memorandum of Association

A memorandum of association (MOA) contains a  name clause, registered office or business location clause, objective or objects clause, liability clause, capital clause, as well as an association clause. MOAs are legal documentation that are prepared prior to the registration of limited liability companies (LLCs).

The purpose of an MOA is to explain a business’s relationship with all its stakeholders. It lays out the company constitution along with the articles of association, which is another type of legal corporate document.

Also Read: Difference Between Memorandum Of Association And Articles Of Association

Here are the main clauses of Memorandum of Association

Name Clause

This particular clause states the proposed name of the limited liability company. Naming policies businesses in UAE are to abide include:

• The business name must be unique or not identical or similar to the name or brand of an existing company;
• It shouldn’t mention any affiliation to a particular religion or political organization;
• It shouldn’t allude to a new company doing business of existing companies;
• The name of the business shouldn’t use indecent or obscene words

Registered Office Clause

This clause lists of the locations where the company operates and can be located. The physical location of a registered office determines the jurisdiction it falls under, as well as which court a Registrar of Companies it’s registered with. In addition, it also states the full address of the registered office, which simplifies communications.

Objective or Objects Clause

The objects clause or the objective clause is necessary for a memorandum of association. It limits and defines the scope of a company’s operations. It provides details on the scope of activity the company will undertake and explains how capital provided by members will be used.

This clause protects the funds of stakeholders and make sure they are used only for specific business purposes rather than risked with other unrelated endeavors.

In addition, this explains why the business has been established. A company isn’t legally allowed in doing any type of business outside what’s stated within the class. The object clause in a MOA should contain:

• Nothing illegal;
• Nothing that is against the rule of law of the country;
• Nothing that is against the public’s interest;
• Any object that is not included in the incidental and main objects;
• Incidental objects which are necessary in achieving the main object of the company;
• The main objects of the LLC that it will be pursuing following approval for incorporation

Liability Clause

This clause explains the liability of every member of the company. For a limited by shares company, the liability of every member will not more than each share’s face value. For a limited by guarantee company, the clause defines the liability of every individual stakeholder. For an unlimited company, the clause wouldn’t be included as stakeholders are entirely liable of the business.

Capital Clause

This clauses lists down the information regarding the total capital that is held by a proposed company. The amount is called authorized capital of a company. Companies are not permitted in collecting more money than what’s listed under the authorized capital.

The way capital is divided to preference share capital and equity share capital also has to be included in this clause. A company’s number of shares it tends to put into preference share capital and equity share capital, alongside their value have to be included in a memorandum of association.

Association Clause

The association clause provides confirmation that all individuals that have signed at the bottom of the memorandum of association intend to be a part of the company. The MOA needs to have at least seven signatories. For a private company, the minimum number of signatories is two. The signatures have to be witnessed by a public notary as well. There may be a single witness for every single one of the signatures. All witnesses and subscribers need to provide their occupations and addresses in writing.

Also Read: How To Write Effective Minutes Of Meeting Quickly

Legal Drafting of MOA in UAE

If you need assistance in the drafting of a memorandum of association in UAE, don’t hesitate to call our legal drafting team. Our team comprises of lawyers and legal consultants who are all experienced in corporate law and the local legislation relevant to drafting this important requirement for business setup or company formation in UAE.

We don’t recommend businesses in UAE to utilize pre-written MOAs that can be downloaded online as they don’t provide them with the Notary Service as they need in order to be enforceable and considered valid in the eyes of the law. Also, no two businesses have the same operations. From sole proprietors to corporations, we provide assistance. We’ll help you create a tailored and bespoke memorandum of association that meets and addresses the needs of the stakeholders and the business.