What is the purpose of a Memorandum of Incorporation
Running a business in South Africa involves the fulfilment of certain requirements. One of these requirements is getting a Memorandum of Incorporation for your company.
What is an MOI?
A Memorandum of incorporation is a document that sets out the rights, duties and responsibilities of shareholders, directors and others within and in relation to a company and by which a company is incorporated under the Act.
It’s a key document that’s required when setting up a business in South Africa.
Why is a memorandum of incorporation required?
This document represents a set of rules that companies may accept, change or supplement to suit particular needs of the company. The most basic definition of an MOI is that it’s the founding document of the company and sets out the structure and governance of the company.
The MOI came into effect following changes made to the Companies Act 71 of 2008. The MOI was introduced in 2008 and has replaced previous legislation.
Under the old Act there were two documents (The Memorandum of Association and the Articles of Association).
Pre-existing companies which still have Articles and a Memorandum of Association are required to convert to a Memorandum of Association.
This document is not only binding between the company and its members, but also between and amongst the members, prescribed officers and members of the audit committee. It also represents the company’s internal code of corporate governance and represents practical implementation of the Act.
The primary purpose of the MOI is to protect the interests of shareholders in the company. The document has priority over the Companies Act as long as it does not conflict with the Act.
The Companies and Intellectual Property Commission (CIPC) has made certain standard Memorandums of Incorporation (MOIs) available. To find out more about the MOI, simply visit your nearest CIPC outlet and speak to a consultant.