What Is a Memorandum Of Association In Pakistan?

When planning to start a company in Pakistan, you must meet significant legal requirements, one of which is the Memorandum of Association (MOA). This document defines your company’s identity, objectives, and legal structure. Without it, your company cannot be registered with the Securities and Exchange Commission of Pakistan (SECP).

In this article, we describe all the aspects of the Memorandum of Association, including its importance, the legal framework under the Companies Act 2017, its key elements, the process of drafting and filing it with SECP, and common mistakes to avoid. At Company Enrolla, we help you in company registration, draft and file an MOA for your business in compliance with the regulatory requirements of Pakistan. 

Importance Of The Memorandum Of Association In Pakistan

Every company in Pakistan, whether private, public, or single-member, must have an SECP-approved MOA for starting its operations in Pakistan. It clearly states the purpose of the company, the extent of its liability, its authorized share capital, and the activities of the company. It makes clear what a company can do and cannot with its chosen legal structure.

The MOA is compulsory as it ensures transparency in company operations, protecting both the company and the shareholders from any legal consequences. Therefore, a well-drafted MOA also prevents legal issues, avoids delay in registration, and restricts the misuse of company powers.

Legal Framework Under The Companies Act, 2017

The MOA in Pakistan is prepared in accordance with the Companies Act 2017, which replaced the old Companies Ordinance of 1984. Every company must submit the Memorandum of Association (MOA) to the SECP during its registration process, as it is considered the foundation on which a company is set up in Pakistan. 

The format of MOA varies for private, public, or single-member companies. Any changes to it need approval from shareholders and the SECP. Thus, under the Companies Act 2017, the MOA defines the legal boundaries within which a company can operate in Pakistan. 

Key Elements Of The Memorandum Of Association:

The following are the key elements of the Memorandum of Association (MOA) for businesses in Pakistan:

The Name Clause:

The first clause of the MOA defines the company’s official name. The name of a private company must end with “(Private) Limited,” while a public company’s name ends with “Limited.” The SECP does not approve names that are identical, misleading, or offensive in nature. The chosen name must be unique and approved by SECP before company registration.

The Registered Office Clause:

This clause mentions the province and city where the company’s registered office is located. It determines the SECP jurisdiction and serves as the official address for notices and communications. The address must be accurate, as it is used for all government correspondence and legal documents.

The Object Clause:

The object clause defines the company’s main purpose and allows business activities in Pakistan. It sets the boundaries within which the company can operate legally. Every business action must follow this clause; otherwise, business owners may face serious legal consequences. It should clearly state the company’s main objectives while adhering to SECP rules for future flexibility.

The Liability Clause:

This clause explains how much company members are responsible for the company’s debts. Generally, liability is limited to any unpaid amount on their shares, protecting personal assets. However, in an unlimited company, members can be personally liable.

The Capital Clause:

The capital clause defines the company’s total authorized share capital and the value of each share. It illustrates how ownership is divided among shareholders and the amount of capital that can be raised. Any future changes in capital must be formally approved by SECP before taking effect.

The Association Clause:

The final clause includes the names of the subscribers who agree to form the company. It shows how many shares each will take and must be signed by all shareholders in the presence of a witness. Their full names, CNIC numbers, and addresses must also be mentioned in this clause.

Step-by-Step Guide To Drafting A Memorandum Of Association In Pakistan

The following is the step-by-step process to prepare a Memorandum of Association for your company registration according to the SECP guidelines:

Step 1: Choose The Company Type:

The first step is to choose which type of company you want to form. It can be a private limited company, a public limited company, or a single-member company. The type you choose will decide the structure and format of your Memorandum of Association.

Step 2: Reserve a Company Name:

Secondly, you have to reserve your company name using the SECP’s online e-services portal. The name must be unique and follow SECP naming rules. It should not be similar to any existing company name or contain restricted or misleading words.

Step 3: Draft the Clauses:

In the third step, you are required to draft the clauses of the MOA as per SECP requirements. You need to carefully draft each clause, including all required details. You have to ensure that everything complies with the Companies Act 2017 to ensure your document meets all legal requirements.

Step 4: Define Business Objectives:

In the fourth step, you have to confirm that the MOA clearly outlines the business objectives and explains the primary and related business activities your company will undertake. You should avoid using unclear or broad wording, as SECP may reject it. Your objectives should match your actual business plan and future goals.

Step 5: Get Shareholders’ Signatures:

The last step in drafting the MOA is that it must be signed by all shareholders in front of a witness. Their signatures indicate that they agree to the terms outlined in the MOA clauses and accept the number of shares specified in the document.

Memorandum Of Association Vs Articles of Association:

The following is the clear difference between the Memorandum of Association (MOA) and the Articles of Association (AOA) for company registration in Pakistan:

Aspect	Memorandum of Association (MOA)	Articles of Association (AOA)
Purpose	It defines the company’s identity, objectives, and scope of operations.	It governs the internal rules, management, and administration of the company.
Nature	It is a fundamental and external document.	It is an internal document for company operations.
Accessibility	A public document that anyone can inspect through SECP.	Generally, it is the requirement of company members, directors, and officers.
Content	It contains clauses like Name, Registered Office, Object, Liability, Capital, and Association.	It contains rules about meetings, directors, voting, shares, and internal governance.
Legal Requirement	It must be filed at the time of company incorporation.	It must also be filed along with the MOA during registration.
Amendments	Changes in MOA require the approval of the SECP and a special resolution.	Changes in AOA can be made more easily through a special resolution by members.
Scope	It defines what the company can and cannot do.	It explains how the company will be run and managed.
Binding Power	It binds the company and the public.	It binds the company and its internal members only.

This table clearly shows that the MOA defines what a company is and what it can do, while the AOA defines how it will function and be managed internally.

MOA Filing Process With SECP:

The following are the steps you must follow to file your MOA with SECP:

Create an SECP Account:

The process starts by creating an account on the e-services portal of SECP. This account allows you to access the online registration process.

File Company Registration Application:

In the second step, you need to file a company registration application through the portal. Here is a mandatory requirement of filing a Memorandum of Association (MOA) for your company registration. Before filing the MOA, you must draft it by following the above steps.

File The MOA To The SECP:

In this step, you need to file the drafted MOA on the SECP portal, along with submitting other supporting documents, such as the AOA, CNIC copies, and address details.

After filing the MOA and other supporting documents, you are required to pay the prescribed fee for your business registration to the SECP. The authorities will review all the documents, and if everything is correct, they will issue a Certificate of Incorporation, officially registering your company in Pakistan.

Mistakes To Avoid When Preparing a Memorandum Of Association:

Many companies face problems during registration due to minor mistakes in their MOA. A common issue is writing unclear or very broad business objectives, which SECP often rejects. 

Secondly, if you are using a name that is too similar to another company or missing required details, such as signatures or share capital, it also causes delays in filing the MOA with the SECP. 

How Company Enrolla Can Help You?

To avoid the above mistakes in filing the MOA and smoothly registering your business in Pakistan, you must get professional support. Our experts help you draft, review, and file Memorandum of Association with the SECP. 

We ensure that all documents comply with the Companies Act 2017 and are free from errors. From name reservation to final incorporation, we handle every step of business registration in Pakistan efficiently so you can focus on growing your business with confidence.

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