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What Is A Memorandum Of Association & Why It Is Important?

Memorandum of Association In UAE

A Memorandum of Association (MOA) is required when you start a business in the UAE. The MoA is an important document that defines your company’s structure and legal framework. The MoA defines the business’s purpose, operations, and shareholder responsibilities. 

The MoA sets clear rules for the company and ensures legal compliance.  Failure to properly draft or register the MoA can result in delays, legal issues, or even rejection by the relevant authorities.

In this article, we cover the importance of the MoA for your business, its key elements, and the steps for proper registration of MoA in the UAE for startups. At Now Consultant, we provide expert services to draft, review, and register your MoA, ensuring full compliance with UAE laws. 

What Is The Memorandum Of Association In UAE:

A Memorandum of Association (MoA) is an important legal document required during the registration and formation of a company. It serves as a foundational agreement, outlining the relationship between the shareholders and the company, particularly in its dealings with the outside world.

The MoA specifies the rights, responsibilities, and privileges of shareholders, ensuring they understand their roles and the company’s expectations. Additionally, the MoA limits the company’s activities to those explicitly stated within it, helping the business stay aligned with its goals and comply with applicable laws and regulations.

Importance of Memorandum of Association

The following is the importance of a Memorandum of Association (MoA) for startup businesses in the UAE:

Defines the Company’s Purpose: It clearly outlines the company’s goals and the nature of its activities.

States Official Address: The MoA provides the company’s official location for all legal and formal matters.

Describes Share Capital and Ownership: It expresses how shares are distributed and details the company’s ownership structure.

Clarifies Shareholder Roles: It explains shareholders’ duties and responsibilities to clarify their roles.

Legal Compliance: The MoA makes sure that the company meets the legal requirements set by the UAE government.

Protecting Shareholder Rights: The MoA clearly explains the rights and responsibilities of each shareholder, which helps protect everyone’s interests.

Legal Necessity: In the UAE, a company must have an MoA to be legally recognized. Without this document, a company cannot register or obtain a business license.

What Information Is Included In the Memorandum of Association?

A Memorandum of Association (MoA) in the UAE must cover the following information:

  • Company Name: The official name of the company, which will be used in all legal and business documents.
  • Scope and Limitations: It defines the areas in which the company can operate, clarifying what it can and cannot do.
  • Business Address: The official address for the company, used for formal communications and legal matters, including the specific location of the headquarters.
  • Relationship and Member Rights: The MoA describes the relationship between the company and its members, explaining the rights and duties of each member.
  • Objective Clause: It states the main goals and activities of the company.
  • Shareholder Responsibilities: This section explains the duties of the shareholders.
  • Share Capital: The total amount of share capital in the company is detailed in this section.
  • Capital Division: It describes how the company’s capital is split into shares. This part may not apply to limited liability companies, which can have a different structure.
  • Business Activities: This section lists the activities the company is allowed to engage in, ensuring they align with the business objectives.
  • Capital Structure: The MoA provides information about the share capital, including the number and value of shares owned by each shareholder, which affects the ownership and liability of the company.

How Do You Get a Memorandum of Association (MoA) For a Company In Dubai?

The following are the steps that need to be accurately completed to get the Memorandum of Association (MoA) for your startup business in the UAE:

Step 1: Preparing the Memorandum of Association (MoA)

The first step in drafting the MoA is gathering important information about the shareholders and the company’s capital structure. This data is important for creating the initial draft, which needs to be prepared in Arabic. 

For those who require it in other languages, translations can be provided to ensure all stakeholders understand the document.

Step 2: Reviewing and Notarising the MoA

After drafting the MoA, shareholders must carefully review it to confirm it aligns with their agreement and resolve any inconsistencies. Once it is approved, the document goes through notarisation, where a notary public verifies the authenticity of the details and the shareholders’ identities. 

After notarisation, the MoA is registered with the appropriate authority, making it a legal contract required for obtaining a business license.

Step 3: Legal Advice and Consultation

Step three is very important as it would be hard to proceed without professional guidance. In order to seek legal advice when drafting a Memorandum of Association (MoA) is significant to ensure it meets all legal requirements. 

Failing to get legal help can lead to non-compliance, causing legal problems and delays in operations. Now Consultant provides expert guidance in drafting, reviewing, and notarising the MoA, ensuring compliance and preventing potential legal issues. 

Step 4: Registering the Memorandum of Association in the UAE

Step four comprises registering the Memorandum of Association for your business in the UAE:

Registration Authorities:

For companies outside Free Zones, the Economic Department of the respective Emirate handles the registration of the Memorandum of Association (MoA). 

Within Free Zones, the registration is managed by the relevant Free Zone authority. The process usually takes around four working days, but this may vary depending on the business structure and the authority.

Required Documents:

The documents required for the Memorandum of Association include a business plan, passport copies of all shareholders and the manager, and a notarised Registry Identification Code Form for the manager. Shareholders’ and the manager’s specimen signatures are also needed. Additional documents like trade licenses, titles, or financial statements may be required in specific cases.

Fees and Timelines:

The cost of registering a company depends on its type, location, and specific needs. 

In Dubai, the cost of a Memorandum of Association includes an AED 300 fee for document attestation if its value is up to AED 100,000 and an AED 500 fee for signing at business centers. These fees ensure the document is legally verified and notarized.

Difference Between Memorandum & Articles of Association

The following is the clear difference between a Memorandum of Association and an Articles of Association for startup businesses in the UAE:

FeatureMOA (Memorandum of Association)AOA (Articles of Association)
PurposeDefines the company’s key details and objectives.Outlines rules and regulations for internal management.
FocusFocuses on the company’s primary goals and overall framework.Focuses on day-to-day operations and governance procedures.
AmendmentsIt cannot be easily amended after approval.It can be amended through a special resolution at a general meeting.
Legal StandingActs as the foundational charter of the business.Subordinate with the MOA to guide internal affairs.
Required for RegistrationMandatory for all companies.Created, if necessary, to govern the company’s internal operations.
Legal SupportRequires legal drafting by a qualified lawyer.Requires legal guidance for drafting and amendments.

This table highlights the main differences between the two legal documents used in business formation and governance.

Who Creates Memorandum of Association? 

A Memorandum of Association (MoA) is significant for defining a company’s structure, activities, and shareholder roles in the UAE. For that purpose, an expert is required to ensure that your Memorandum of Association (MoA) is accurately drafted and fully compliant with UAE regulations. 

At Now Consultant, we have a team of experts who offer comprehensive support, from drafting and reviewing your MoA to notarizing and registering it with the appropriate authorities. Our experienced professionals confirm that every step is completed smoothly, saving you time and minimizing legal risks. 

FAQs:

Can The Memorandum Of Association Be Amended After Incorporation?

Yes, a Memorandum of Association (MoA) can be amended after incorporation. However, the changes require passing a special resolution during a shareholder meeting, and the process can be quite extensive and complex.

Is a Memorandum of Association Mandatory For All Companies In Dubai?

Yes, a Memorandum of Association (MoA) is mandatory for all companies in Dubai. It outlines the company’s structure and ensures legal recognition, without which the business cannot be registered or obtain a license.

Can I Run a Business Without MOA In UAE?

No, you cannot run a business without a Memorandum of Association (MOA) in the UAE.  The MOA is a mandatory legal document for all types of businesses.

Do Free Zone Companies In Dubai Also Need A Memorandum Of Association?

Yes, Free Zone companies in Dubai also need a Memorandum of Association (MoA). After notarization, the MoA must be filed with the relevant Free Zone authority to obtain a business license and start operations.

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