Memorandum of Incorporation explained
When establishing a business in South Africa, it is compulsory to create a Memorandum of Incorporation that adheres to guidelines outlined by The Companies Act of 2008 and submit it to the Companies and Intellectual Property Commission (CIPC) in conjunction with the business registration application.
The Memorandum of Incorporation, or the “MOI”, records the rules that govern the conduct of a company as specified by its owners and plays an integral role as it outlines the legal capacity of the business, along with the powers and obligations of its directors and shareholders. It provides the foundation for the company’s governance and serves as a reference point in settling any disagreements that may surface among the company’s stakeholders.
The Memorandum of Incorporation contains:
- Details of the incorporators
- Number of directors and alternate directors
- Share capital
- Company conduct rules
Provisions of the Memorandum
To assist business owners, the Memorandum of Incorporation, as prescribed by the Act, contains provisions that are alterable as well as unalterable. A company may, therefore, adapt the alterable provisions to suit its own requirements.
Examples of alterable and unalterable provisions are:
Alterable:
- Notice periods for meetings may be amended to a longer period than the standard recommendation.
- A higher minimum number of directors may be imposed by the business owner.
Unalterable:
- Directors duties.
- Enhanced accountability rules for public and state-owned enterprises.
OUR ROLE IN YOUR MEMORANDUM OF INCORPORATION
Creating a Memorandum of Incorporation that adheres to the law necessitates in-depth knowledge of The Companies Act of 2008, as well as the specific needs of the company. Furthermore, it must align with relevant regulations concerning the company’s governance frameworks, voting protocols, and decision-making procedures.
Our team is trained in developing the Memorandum in accordance with the provisions of the Act and can assist further with amendments to your MOI or adoptions thereto. We will guide you in terms of clauses therein that are unalterable under the Act, as well as counsel you in terms of practical inclusions in your alterable rules.
