Memorandum of Incorporation (MoI)
The most important document governing a company is the Memorandum of Incorporation (MOI). The MOI sets out the rules governing the conduct of the company, as specified by its owners. The Companies Act imposes certain specific requirements on the content of a Memorandum of Incorporation, as necessary to protect the interests of shareholders in the company, and provides for a number of default company rules / alterable provisions, which companies may accept or alter as they wish as long as it is in line with the Companies Act.
Alterable provisions within the Companies Act, 2008:
- A company has all the legal powers and capacity of an individual, except to the extent that
- A juristic person is incapable of exercising any such powers, or having any such capacity; or
- The company’s MOI provides otherwise (e.g. the MOI may state that no director may contract on behalf of the company in his/her own capacity).
- Private, non-profit and incorporated companies may elect to comply with the extended accountability requirements of Chapter 3 of the Act (Sect 34(2));
- Shares within the same class has the same rights, limitations and terms, unless the MOI provides otherwise (Sect 37(1));
- MOI may exclude the right of first refusal of current shareholders of a private company in respect of shares issued by the company (Sect 39(3);
- MOI may forbid the board to render financial assistance to parties wanting to acquire shares in the company (Sect 45(2);
- MOI may provide for longer minimum notice periods for meetings;
- Electronic notice and electronic participation in meetings are allowed unless MOI prohibits it (Sect 63(2);
- Companies may determine a higher number of minimum directors than what the Act prescribes (Sect 66(2).
Unalterable provisions are provisions of the Act which the company may not change, such as directors’ duties and responsibilities and enhanced accountability requirements for public and state owned companies. In instances where the MOI is in conflict with the Act, the Companies Act will prevail. In addition, the Act allows for companies to add provisions to address matters applicable to that company, not addressed in the Act itself, but all provisions of the MOI must be consistent with the Act. The Memorandum of Incorporation contains the following information:
- Detail of Incorporators
- Number of directors and alternate directors
- Share capital (maximum issued)
- Content of MOI