Role of the Memorandum of Incorporation (MOI)

The Role of the Memorandum of Incorporation (MOI) in the Company Registration setup

Definition of a MOI

The MOI is a registered legal document which sets out the rights and obligations of the shareholders and the directors within the company. It also ensures that the director/s and shareholder/s act in the best interests of the company.

It is a very important document as the clauses in the MOI have priority over the Companies Act as long as it does not conflict with the Act.

Standard MOI (CoR 15.1A) – Short Form

The MOI is a complicated document and it requires a great deal of knowledge to draft a MOI tailored for a specific company. CIPC has therefore drafted 2 MOI’s:

·         Standard MOI known as the CoR 15.1A which is only 4 pages long, has no alterable provisions and costs R175. We therefore use this as the default MOI for all SwiftReg’s company registrations

·         A longer MOI known is the CoR 15.1B or long Form (11 pages) and includes the alterable provisions at a cost of R475 and is therefore not ideal to use in the company registration establishment.

SwiftReg has chosen to use the short MOI 15.1A for all our companies as it is cheaper and was drafted by CIPC and speeds up the company registration completion time.

Must old companies with Memorandum and Articles adopt the new MOI?

No, According to Practice Note 1 of 2012 of the CIPC website, there is no obligation to adopt the new MOI. Companies may for a period of two years (1 May 2011 to 30 April 2013) have the option to adopt the new MOI at no cost. If the old company does not adopt the new MOI then the old Memorandum and Articles become known as the MOI. If there is any conflict in the provision between the MOI and the Act then the Act will apply.

The issue for old companies not adopting the new MOI is that the old articles require all companies to be audited and hold Annual General Meetings (AGM). The new companies Act does not require companies to be audited nor to hold mandatory AGM’s. Therefore the companies that have kept their old articles should by law still hold an AGM and be audited at great cost. The new companies Act changed the audit requirements to a point system called a Public Interest Score (PIS) meaning if you have more than 350 points you would require and audit.

In summary it is therefore advisable but NOT compulsory for an old company to adopt the new MOI.