Comprehensive Guide to the Memorandum of Association under CAMA 2020
The Company and Allied Matters Act (CAMA) 2020, governed by the Corporate Affairs Commission (CAC) in Nigeria, outlines essential requirements for the formation and operation of companies.
The Memorandum of Association (MOA) is a pivotal document in this framework. This blog post provides an in-depth look into the MOA, its requirements, and its significance in the Nigerian corporate landscape.
What is a Memorandum of Association (MOA)?
A Memorandum of Association is a fundamental legal document that serves as the charter of a company. It lays out the company's essential details and is necessary for the company's formation. The MOA includes the company’s name, location of the registered office, objectives, and authorized capital. It is executed by the company's initial promoters and is a crucial component in the registration process.
Requirements of the Memorandum of Association under CAMA 2020
CAMA 2020 specifies several key elements that must be included in the MOA of every company. These elements ensure transparency and provide a clear structure for the company’s operations and objectives.
1. Company Details
- Name of the Company: The MOA must state the company's official name.
- Registered Office: It should be declared that the company's registered office will be situated in Nigeria.
- Nature of Business or Objects: The MOA must outline the nature of the business activities the company is authorized to undertake or, for non-business entities, the objectives for which it is established.
2. Restrictions and Company Type
- Restrictions on Powers: Any restrictions on the company’s powers must be clearly stated.
- Company Type: The MOA must specify whether the company is private or public.
- Member Liability: It should indicate if the members’ liability is limited by shares, by guarantee, or is unlimited.
3. Share Capital Requirements
If the company has a share capital, additional information is required:
- Authorized Share Capital: The MOA must state the authorized share capital, with a minimum of ₦100,000 for private companies and ₦2,000,000 for public companies, divided into fixed shares.
- Subscriber Shares: Subscribers must collectively take up shares worth at least 25% of the authorized share capital. Each subscriber should specify the number of shares they are taking.
4. Subscriber Disclosure
Subscribers holding shares in trust for another person must disclose this fact and the beneficiary's name in the MOA.
5. Companies Limited by Guarantee
For companies limited by guarantee, the MOA must also include:
- Purpose Limitation: They must state that their purpose is not profit distribution but the promotion of commerce, art, science, religion, sports, culture, education, research, charity, or similar objectives.
- No Share Capital: They cannot be registered with a share capital.
- Liability of Members: The total liability of members in case of winding up must be clearly stated, not less than ₦10,000.
Why is the Memorandum of Association Important?
The MOA serves several crucial functions:
- Legal Foundation: It establishes the company’s legal identity and its foundational elements.
- Operational Clarity: It provides clear guidelines on the company’s objectives and the extent of its powers and limitations.
- Investor Information: It offers transparency to potential investors about the company’s structure, capital, and liabilities.
- Regulatory Compliance: It ensures the company adheres to the legal requirements set out by CAMA 2020, avoiding legal and financial penalties.
Understanding the Memorandum of Association is essential for anyone involved in forming or managing a company in Nigeria. It lays the groundwork for the company’s operations and compliance with legal requirements. By ensuring that all required elements are correctly included, businesses can secure a solid foundation for their corporate journey.
Whether you are a business owner, legal practitioner, or stakeholder, comprehending the intricacies of the MOA will help you navigate the complexities of corporate formation and governance under CAMA 2020.
