We detailed in a previous article the authority that your company works under and we briefly touched on the Memorandum of Incorporation (MOI). In this article we will delve deeper into the MOI and how you should apply it. First and foremost, if you are the owner of your own company or are a director, either executive or non-executive, of another company then you must make sure you know the MOI off by heart.
[15(2)] The MOI of the company may include any provision dealing with a matter that the Act does not address, alter the effect of any alterable provision of this Act, or impose on the company a higher standard, greater restriction, longer period of time or any similarly more onerous requirement, than would otherwise apply to the company in terms of an unalterable provision of this Act. Further, it may prohibit the amendment of any particular provision of the MOI at some future date.
It is important to note that the MOI is binding,
- between the company and each shareholder.
- between or among the shareholders of the company.
- between the company and each director or prescribed officer of the company, or any other person serving the company as a member of a committee of the board.
So, what might you want to have in your MOI? You may consider the following.
- Objects and powers of the company.
- Restrictions on future MOI amendments.
- Quorum for meetings (directors and shareholders).
- Procedures for meetings, including electronic presence.
- Composition and powers of the board (including any additional powers of the chair).
- Committees of the board, if applicable.
- Financial matters including requirements for audits, if applicable.
- Notices and communications.
- Company rules.
The MOI is not a long or complicated document. It is in your interests to understand it.
