Forming a business goes beyond having a vision and business sense. There is also a substantial amount of legal proceedings involved. Having a company also means that it will need to be recognised as a legal entity. This way, the company can receive necessary legal benefits and will be compliant with all necessary requirements.
What is a Memorandum of incorporation?
Before implementation of the Companies Act of 2008, companies had to be registered by way of both a Memorandum of Association and Articles of Association. Once the new Act was enforced, companies had to register with a single Memorandum of Incorporation (MOI).
The MOI is a document that states particular rules of the company. The MOI essentially gives power to directors of a company. Binding rules are extended to prescribed officers and members of the audit committee in addition to the company and its members.
The MOI represents the founding document of the company and is intended to protect shareholders’ interests.
What is the purpose of the MOI?
The MOI at a basic level promotes transparency in business dealings. It enables simpler and more flexible daily operations. This way, it helps to increase corporate efficiency.
The MOI stipulates the rights, duties and responsibilities of shareholders, directors and others within and in relation to a company and other related matters. It sets out rules that may be accepted, amended or supplemented by companies in order to suit individual needs. Company rules must remain consistent but there may be alterable provisions. These are amendments which constitute special conditions applicable to the company.
When a new company is incorporated, the MOI must be completed and filed as a notice of incorporation. This document represents the company’s first action as a legal entity.