The Memorandum of Association is the company's charter that governs the relationship between the company and the outside. It is one of the documents required to incorporate a company in India and states the following:
- The company's name
- The situation of its registered office
- Its share capital
- The fact that liability is limited
- Most importantly - the object for which the company has been formed.
In theory, the company can only operate in the areas mentioned in the objects clause, but in practice the clause is drawn to cover as wide an area as possible. In case a particular business area has not been covered in the object clause of the MoA and may be desired at a later date, it can be added in the Memorandum when desired. If required a 75 per cent majority of the members of the company can change the objects whenever they like. Nevertheless, it is worth bearing in mind that directors of the company will incur personal liability if the company engages in a type of business which is not authorised by the objects clause.