Every Indian company files its Memorandum of Association (MOA) and Articles of Association (AOA) as part of incorporation. The MOA is the constitution — what the company exists to do. The AOA is the operating manual — how decisions are made, how shares are issued, how directors are appointed. Both are public documents, attached to the Certificate of Incorporation.
MOA — the five clauses
- Name clause — the company name as registered with MCA.
- Registered office clause — state of registered office (not the full address; that's filed separately in INC-22).
- Object clause — the main objects (core business) and ancillary objects (incidental to the main). For tech: software development, SaaS, IT services, IT-enabled services, R&D, sale of digital products. Make it broad enough to cover adjacent businesses you might enter.
- Liability clause — limited by shares (for Pvt Ltd) — confirms shareholders' liability is limited to their unpaid share capital.
- Capital clause — authorised share capital and division into shares.
Object clause — getting it right
The object clause defines what the company is permitted to do. Activities outside the object clause are ultra vires. For a tech company, draft it broadly enough that natural adjacencies don't require an MOA amendment:
- Design, develop, license, sell and distribute software products, software platforms, applications, SaaS offerings, mobile applications, and any related digital services.
- Render information technology services, IT-enabled services, BPO, KPO, technical consulting, software customisation and implementation services.
- Conduct research and development in computer science, artificial intelligence, machine learning, data science, analytics, and related fields.
- Develop and exploit intellectual property — patents, copyrights, trademarks, trade secrets — relating to the above activities.
- Carry on any business incidental, ancillary or necessary to the achievement of the main objects.
MOA / AOA drafting bundled with incorporation
FastLegal drafts your MOA and AOA as part of the incorporation engagement — calibrated to your business model, fundraise expectations and ESOP plans. Documents are reviewed by our partnered corporate counsel before filing. Amendments later cost less when the original drafting is forward-looking.
AOA — the clauses foreign-funded subsidiaries should add
The standard AOA template that comes with SPICe+ is bare-bones. For foreign-funded tech companies, add these clauses now — much cheaper than amending later.
- ESOP enabling clause — explicitly authorises the company to issue stock options to employees / directors / consultants subject to a board-approved ESOP scheme.
- Sweat equity clause — authorises issue of sweat equity shares to founders / employees for IP / services contributed.
- Different classes of shares — authorises preference shares, equity shares with differential rights, etc. Useful for fundraise structuring.
- Pre-emption rights — gives existing shareholders the right to subscribe pro-rata in new share issuances. Standard in foreign-funded structures.
- Drag-along and tag-along rights — for shareholder alignment at exit. Drafted carefully to align with the foreign parent's expectations.
- Board composition — minimum and maximum number of directors, residency requirements, nomination rights for key shareholders.
- Quorum and decision thresholds — what matters need supermajority, what need simple majority, what board reserved matters need foreign parent consent.
- Voting rights — usually one share = one vote, but the AOA can specify differential voting rights for specific classes.
Authorised share capital — set it generously
Authorised capital is the maximum value of shares the company can issue without an MOA amendment. Setting it too low forces an amendment at the next fundraise, costing time and fees. Setting it generously upfront is essentially free.
- For an early-stage WOS expecting fundraises: authorise ₹10 lakh - ₹1 crore equity authorised capital, even if only ₹1 lakh is issued initially.
- Each authorised share has a face value (typically ₹1 or ₹10). 10 lakh shares of ₹10 face = ₹1 crore authorised.
- Stamp duty is on authorised capital — paid once at incorporation. Higher authorised = higher stamp duty. State-specific rates.
How amendments work later
MOA / AOA amendments require a special resolution at a general meeting (75% shareholder approval) plus filing the change with MCA via Form MGT-14 and any related forms. Typical amendments:
- Increase authorised share capital — common before each fundraise round.
- Add new objects — when entering a new line of business.
- Change registered office to a different state — requires NCLT approval (longer process).
- Adopt a new set of articles — common after Series A when investors require their preferred AOA template.
Frequently asked questions
Can we use a standard MOA / AOA template from the internet?+
Yes for the basic structure; no for the substantive clauses. Tech / foreign-funded specifics — ESOP enabling, drag-along, board composition — need to be drafted to your situation. A poorly drafted AOA costs more at the next fundraise (investors require amendments).
Do we need a lawyer for MOA / AOA?+
Most incorporation service providers (including FastLegal) bundle MOA / AOA drafting with the incorporation engagement, with review by counsel. For complex shareholder structures or unique business models, hire dedicated corporate counsel.
Can the MOA / AOA be in a language other than English?+
MCA accepts English and Hindi. Most companies file in English.
What's the cost of an MOA amendment?+
Filing fee ₹600-1,000 + stamp duty on increased capital (if applicable) + professional fees ₹15,000-50,000 depending on complexity. Increase authorised capital amendments cost more (stamp duty is significant).
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