What Is an MOI?
The Memorandum of Incorporation (MOI) is your company’s foundational document. It outlines the rights and obligations of shareholders and directors and sets rules for governance under the Companies Act 71 of 2008.
Why It Matters
- Governance and Control: The MOI defines voting rights, quorum requirements, shareholder meeting procedures and how directors are appointed or removed.
- Customization: A standard MOI from the CIPC may not suit your company’s unique needs. Customizing allows you to tailor share classes, restrict share transfers, or insert protective clauses for minority shareholders.
- Conflict Prevention: A well‑drafted MOI reduces disputes by clarifying roles and decision‑making processes.
Key Clauses to Consider
- Share Structure: Define different share classes, rights to dividends, and voting entitlements.
- Pre‑emptive Rights: Offer existing shareholders the first option to buy new shares, preventing unwanted dilution.
- Directors’ Powers and Responsibilities: Set out how many directors you’ll have and the scope of their authority.
- Meetings and Resolutions: Specify notice periods, voting thresholds, proxy rights and how special resolutions are handled.
- Restrictions on Share Transfers: Protect ownership by detailing who may buy shares and under what circumstances.
- Dispute Resolution: Include mechanisms such as mediation or arbitration to resolve conflicts without going to court.
Tips for Entrepreneurs
- Get Professional Help: Always consult a corporate attorney or company‑secretarial expert when drafting or amending your MOI.
- Align with Shareholder Agreements: Ensure your MOI and any shareholder agreement complement each other. The MOI takes precedence if there’s a conflict.
- Review Periodically: Update the MOI when you bring in new investors, change your business model or the Companies Act evolves.