MOI Changes

Description

What is an MOI?
MOI stands for the Memorandum of Incorporation and is the documents which sets out the rules of conduct for the directors and shareholders on how to govern the company.

What are the main elements of an MOI?
The main elements of the MOI set out the rights, duties and responsibilities of the directors and shareholders as how they should run the company. It is also an effective tool to hold directors and the owners accountable .

Can you change an MOI?
Yes you can, however any changes to the MOI may not be in conflict with the Companies Acts. If, for some reason, the new rules are in conflict with the New Companies Act then the Act will always take precedence in the ruling over the MOI.

What is the Short MOI?
The standard MOI or CoR 15.1A for private companies has been drafted by CIPC and is referred to as the short MOI. The benefit of using the short MOI for a new company registration is that it is compliant with Act as there are no options available for modification. It is a simplified MOI which means that it is more cost effective. So logically most newly registered (Pty) Ltd use the short MOI to register their companies.

What is the Long MOI?
Currently the most common reason to modify the standard MOI is for Non Profit companies to include the tax exemption clause. The second most common change is to convert the old Articles of Association and Memorandum of Understanding to the new MOI. This is only applicable to private companies registered before 1 May 2011.

How do I change the old Articles to the new MOI?
This is a two-step process – the first of which is the conversion of the Par Value Share into Non Par Value shares. Once this process is complete, we continue with standard procedure to adopt the new MOI.

Why do companies registered before 1 May 2011 want to adopt the new MOI?
The primary reason is that the old Articles of Association and Memorandum of Understanding require all private companies to be audited. This is a very costly exercise which most companies would prefer to avoid. The new Act requires companies to be audited only if their Public Interest Score is more than 300 points – which is a tiny fraction of private companies. To bring the company rules in line with the new audit requirement most companies adopt the new MOI.