Because of the latest Companies Act that have been introduced in South Africa, there are some changes which have been made in the registration of companies, whether private or public. As against the Articles and Memorandum of Association that was obtainable in the past, companies now need to have Memorandum of Incorporation to get their registration rolling. This is why this article looks into what MOI is and some vital information that must be included when drafting yours, among other things.
The introduction of the Companies Act of 2008 in South Africa has since changed the registration of companies in the country. Now, a Notice of Incorporation must be completed, and a Memorandum of Incorporation (MOI) registered before any organisation can be registered. Moreover, an emphasis is placed on this document so that if it is not composed or if the contents do not align according to the Act, no registration would take effect, hence, the need to get the process right before you start off.
What is a company MOI?
A Memorandum of Incorporation is a document that spells out the rights, responsibilities, and duties of the directors, shareholders and other important personalities in a particular organisation. An MOI contains fundamental conditions in which a registered company would be permitted to operate or carry out its activities. Before an organisation can be registered, it is always expected that they have their Memorandum of Incorporation as this document, among others, will explain the structure and operations of the organisation.
According to the Companies Act of 2008, there are two options that people who want to register a company can opt for in terms of the MOI. One is shorter in that it goes straight to the point and another one which is longer with detailed information about the company and its activities. The type of organisation that you are registering determines which one you may go for.
What is included in the Memorandum of Incorporation?
An MOI is expected to carry the name of the company having "Limited" as the last word if it is a public limited company. But if the organisation is a private limited one, then the last words must be "Private Limited". Information about the state in which the organisation office would be situated after registration must also be spelled out. Also, you must state information about the business activities of the organisation to be registered as well as the board committees, the powers of the directors and shareholders of the company.
Moreover, the MOI should contain the procedures which must be followed whenever changes needs to be made to the current Memorandum of Incorporation. Process that must be followed before board meetings can be convened and the period of notice which must be given should be spelt in the MOI. While the set of rules contained in the document is permitted to be changed or supplemented at any time, it is expected that whatever amendment of Memorandum of Incorporation that is done must be consistent with the provisions of the Companies Act.
Memorandum of Incorporation for private companies
Apart from those, the following are specific information that you must compulsorily add up to the Memorandum of Incorporation for South African companies according to the Companies Act:
- Content of MOI;
- Adoption of the Memorandum of Incorporation and the details of those present;
- Detail of Incorporators;
- Share capital (maximum issued);
- The compensation plan and financial assistance for directors;
- Resolutions of shareholders;
- Information about meetings with shareholders;
- The number of directors and alternate directors.
Memorandum of Incorporation for NPO
The following are part of the information which are expected to be the MOI of an organisation that is not for profit:
- Adoption of the Memorandum of Incorporation and this must contain the information of every person who adopted it including their names, identification numbers, and signatures.
- State the incorporation of the organisation which is expected to be an NPO.
- The nature of the organisation should be written, and this should include the object and powers of the company and the rules as well.
- How the Board of Directors are composed together with their indemnification and authority must not be missing.
In conclusion, as part of the formation requirements of any company in South Africa, having a Memorandum of Incorporation prepared according to the regulations of the Company Act of 2008 is inevitable. This is because the document contains specific information concerning the organisation which includes the name and nature of the organisation, the power of the Directors and shareholders as well as other details like share capital, resolutions of shareholders and so on.