The importance of a Memorandum of Incorporation.

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. – CIPC.

  • The Memorandum of Incorporation contains the following information:
  • Detail of Incorporators
  • Number of directors and alternate directors
  • Share capital (maximum issued)
    Content of MOI

Like the Constitution of a company it can accommodate very simple company structures, or very complex structures.

  • Types of provisions in Memoranda of Incorporation:
  • Objects of the company
  • Restrictions and limitations on the powers of the company
  • Composition of the board of directors
  • Election and removal of directors
  • Frequency of board or shareholders meetings
  • Powers and restrictions of directors and shareholders
  • Voting rights of shareholders
  • Specific audit requirements
  • Procedures for amendment of the MOI

Sole Proprietorship

  • Company registration is not required by the Companies and Intellectual Properties Commission (CIPC)
  • Business name (the name under which you will be trading) must be registered with the CIPC, to meet the requirements of the Consumer Protection Act (CPA)
  • A Memorandum of Incorporation (MOI) is not required.

Partnership

A memorandum of understanding (MOU) is a written agreement between two organizations that helps establish the ground rules for any partnership activities you choose to explore.

A well-executed MOU includes the following:

  • Details about specific projects and initiatives on which the organizations will collaborate, including the scope of projects and the length of time the projects will last.
  • Information detailing how costs associated with joint efforts will be authorized and paid for.
  • Guidelines defining ownership of jointly developed materials and use of those materials after the MOU has expired.
  • The length of time that the MOU will be valid — often known as a period of performance — that includes the date the MOU takes effect and when it ends. Include language that leaves opportunity to renew the agreement. Also, include language so that either party can end the agreement for any reason within a 30-day period based on written notification.
  • Signatures from leadership within the organizations, such as the executive director, board president, or other designated decision maker, and the date the document was signed.

Send us your comments on our website; http://fsnewsonline.co.za/ or official Facebook Page; FS News Online.

For social media platforms, people can follow me on twitter @Panda_Hlalele and Tebello PandaPrenuer Hlalele on Facebook.

Until next week, bye-bye for now.

Yours Truly
Tebello “PandaPreneur” Hlalele
Business Collumnist: FS News Online

Tebello is writing featured articles for FS News Online on weekly basis. He covers various Business related topics and answering relevant questions.

About the Author: Tebello Hlalele, a 22 year old entrepreneur, student and future leader from Meloding Virginia, currently residing in Bloemfontein. He is currently leading a programme called “Hustle on the move”. He aim is to get entrepreneurs in the Free State to reach their desired destinies. He also has a 30 minutes slot with Ace Moloi on Kovsie FM every Friday that interacts with entrepreneurs regarding their challenges.

Leave a Reply

Your email address will not be published.