The Memorandum of Incorporation, or MOI, is the company’s founding governance document. It sets the rules within which the company, directors and shareholders operate. Before issuing new shares, changing a share class or altering special governance rights, the company must confirm that its MOI authorises the proposed action.

Standard and customised Memorandum of Incorporations

Many private companies are incorporated with a standard MOI. It may be suitable for a simple owner-managed business but not for every investment, family or joint-venture arrangement.

For the current official requirements, refer to CIPC’s MOI guidance and CIPC’s company-record guidance.

A customised MOI can regulate matters such as director appointments, voting thresholds, transfer restrictions, pre-emptive rights and different share classes.

Authorised shares versus issued shares

Authorised shares are the maximum shares the company is permitted to issue under its MOI. Issued shares are the portion actually allocated to shareholders.

Creating authorised shares does not automatically give anyone ownership. A separate lawful issue, subscription and register update are needed.

When an authorised-share change may be needed

• The company has no remaining authorised shares of the required class
• An investor requires a new class with different rights
• A historic MOI does not match the intended ownership structure
• Shares were purportedly issued beyond the authorised amount
• A restructuring requires consolidation, conversion or variation of rights

The amendment process

The required approval depends on the Companies Act and the existing MOI. A special resolution or other prescribed corporate action may be required, followed by the correct CIPC amendment filing.

The wording should be prepared carefully because rights attached to a share class affect voting, distributions, capital and future transactions.

Do not repair an old error with a new inconsistency

Where shares were issued incorrectly in the past, simply changing the MOI today may not validate the historical issue. The company should analyse the chronology and obtain legal or tax advice where necessary.

Shareholder percentages, consideration paid, securities registers, tax consequences and beneficial ownership must all reconcile after the correction.

Other governance rules controlled by the MOI

• Minimum and maximum number of directors
• Appointment and removal mechanisms
• Board and shareholder decision thresholds
• Transfer or disposal restrictions
• Pre-emptive rights
• Special rights attached to share classes
• Limitations or extensions permitted by the Companies Act

Documents to retain

• Current and previous MOIs
• Special and board resolutions
• CIPC acceptance notices
• Share subscription or restructuring agreements
• Updated securities register and certificates
• Updated beneficial ownership organogram and submission proof

Example: bringing in an investor

A company with 100 authorised ordinary shares has already issued all 100 to its founder. An investor is promised 20%, but the company cannot simply print another certificate. It must determine the appropriate authorised-share amendment and issue mechanics, consider existing shareholder rights and update the MOI and records in the right order.

When bespoke legal drafting is justified

Use an attorney where the parties require preference rights, reserved matters, vesting, compulsory transfers, minority protections or complex deadlock provisions. A standard compliance filing cannot replace a properly drafted investment framework.

Related LMW guidance covers CIPC beneficial ownership, CIPC annual returns, and company deregistration and reinstatement.

How LMW Financial Solutions can assist

LMW can retrieve and review available company records, prepare routine resolutions and compliance documents, update share registers and assist with CIPC filings. Complex shareholder rights, disputed historic issues or bespoke legal drafting should be handled with the appropriate attorney.

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Frequently Asked Questions

What is a Memorandum of Incorporation?

It is the company’s founding governance document and sets rules for the company, directors, shareholders and securities.

Are authorised shares the same as issued shares?

No. Authorised shares are available for lawful issue; issued shares are already allocated to holders.

Can a company issue more shares than its MOI authorises?

It should not. The authorised position must be checked and amended where necessary before a valid new issue.

Does changing the MOI automatically change the shareholders?

No. Share issues and transfers require separate corporate and record-keeping steps.