5.2 DEFINITION OF THE MOI
The definition of the MOI says that the MOI sets out the rights, duties and responsibilities of the shareholders, directors and others within and in relation to a company. This applies to any company that was incorporated under the New Act and for any pre-existing company i.e. a company that existed prior to the effective date of 1 May 2011.
This means that the current Memorandum of Incorporation and Articles of Association of a pre-existing company, a company formed under the old act is in fact a MOI as defined in the New Act. You might say so what, why do we need to know this? Unfortunately, there are many misconceptions regarding the MOI of a pre-existing company. One of the main issues being in regard to the audit – where an old MOI was in place during the transitional period an audit had to be performed, but once the transitional period was over the new act kicked in and the new rules applied and therefore the audit requirement falls away in my view, or so we thought. SAICA and legal experts say that right now if the company still has the old MOI then an audit must be performed.