What is a Memorandum of Association (MoA) in the UAE
The UAE government introduces rules and regulations to ensure that the rights of all parties involved in any business are protected. The use of Memorandum of Association in the UAE is an example of the best practices that have been adopted by businesses operating in the country. Here, we explain what MoA entails and discuss its functionalities.
ALL ABOUT MEMORANDUM OF ASSOCIATION IN THE UAE
A Memorandum of Association (MoA) is a corporate document signed by the founder members or partners who give their consent to form a company. It is mandatory that every shareholder consents to the opening of a company as per the UAE regulations.
MoAs are written in Arabic and can be translated in other languages. Once the draft is complete, it has to be recorded with the commercial register of the economic department of the particular emirate or the free zone authority the company will operate from. For instance, those opening a business in Dubai will have to engage with Department of Economic Development Dubai.
Depending on the nature of business, you may need to register with specialised regulatory bodies too. The MoA has to be notarised as well.
Memorandum of Association UAE includes the following:
- A MoA outlines the scope and limitations of the company.
- Mentions the business address.
- MoA defines the relationship between the entity and its members as well as the rights of the members.
- It presents the activities a company can engage in and ensures that all activities listed are in line with the intended business operations.
- MoA also outline the share capital of the company as well as the value of the shares owned by each shareholder. A company MoA determines the liabilities and the ownership of the company.
CONTENT OF MEMORANDUM OF AGREEMENT IN THE UAE
There is a particular format of memorandum of agreement in the UAE. The contents of a company MoA includes the following:
- Name Clause: Company’s name that is suffixed appropriately.
- Object Clause: This provides an indication of the products that the company sells. This section can be updated as and when required.
- Situation Clause: This clause outlines that the business works in the UAE and provides the geographical restrictions of the country.
- Capital Clause: Includes the number of registered shares, the company’s stock, and how the shares are divided now or will be split moving forward. It also mentions how much more capital needs to be invested from each shareholder to start a business.
- Liability Clause: This clause outlines whether the company is unrestricted, limited or government-owned. It also answers the question of shareholder or owners’ responsibilities.
GUIDELINES REGARDING COMPANY NAME IN COMPANIES MEMORANDUM OF ASSOCIATION
The naming of any company is a crucial matter. There are certain rules to be adhered to when it comes to company naming as part of the Companies Memorandum of Association.
- The title cannot be same or comparable to an already established company or brand name. It should be original and not be used by any other company in the government’s database.
- The title should not be insulting or unfavourable.
- Doesn’t include any words that imply a direct or indirect patronage or connection with the government.
FAQS
WHAT IS THE DIFFERENCE BETWEEN MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION?
On a basic level, a MoA outlines the scope and limitations of the company. Whereas, the Articles of Association present the rules according to which the company will be run.
HOW CAN ONE DRAFT A MOA?
If you are unsure about the drafting of an MoA, you can always hire services of business consultant companies. Here are a few you can consider:
- HHS Lawyers (+971-52-178-2364)
- Dhanguard (+971-4-591-6166)
- Legal House (+971-55-800-5160)
- Private Notary (+971-4-255-5496)
The cost typically depends on company type and capital value.
CAN A MOA BE AMENDED?
Yes, it can be amended as necessary per the change in the running of business.
CAN YOU RUN A BUSINESS WITHOUT MOA?
No, it is mandatory to register your MoA.
HOW CAN I START A BUSINESS IN DUBAI?
Read our step by step guide to opening a business in Dubai to get an idea of what you need to do. Similarly, the capital city also offers many lucrative opportunities. The government has streamlined the process of opening a business in Abu Dhabi as well. On the other hand, many now prefer investing and operating in smaller emirates for a multitude of reasons, including lower costs. If you are so inclined, read about setting up a business in Fujairah.
Memorandum of Association in the UAE is a mandatory document everyone starting a business has to draft and register. You can do so on your own or hire professional services. Following the rules and regulations shall ensure that your rights as well as of those who you work with will be protected.
