What is the Difference Between MOI and Shareholders Agreement? Why You Need Them Both
When establishing or running a company in South Africa, two crucial legal documents often come into play: the Memorandum of Incorporation (MOI) and the Shareholders Agreement. Though they may seem similar, they serve different purposes and have distinct legal implications. At Burger Huyser Attorneys, we specialise in guiding businesses through these legal nuances to ensure compliance and peace of mind.
What Is a Memorandum of Incorporation (MOI)?
The Memorandum of Incorporation is a legal document that sets out the rights, duties, and responsibilities of shareholders, directors, and others within a company. It is filed with the Companies and Intellectual Property Commission (CIPC) and is a public document.
Key Characteristics of the MOI:
- Governs internal management: It outlines how the company is structured and operated.
- Overrides other agreements: If there is a conflict between the MOI and a shareholders agreement, the MOI will take precedence.
- Mandatory by law: All South African companies must have an MOI under the Companies Act 71 of 2008.
- Customisable to an extent: While standard provisions are available, it can be tailored to suit the company’s unique structure and needs.
At Burger Huyser Attorneys, our commercial law services include drafting and amending MOIs to ensure they are compliant and aligned with your business goals.
What Is a Shareholders Agreement?
A Shareholders Agreement is a private contract between the shareholders of a company. Unlike the MOI, it is not filed with the CIPC and is not accessible to the public.
Key Characteristics of the Shareholders Agreement:
- Details shareholder relationships: It governs how shareholders interact with each other and the company.
- Covers additional matters: Such as dispute resolution, voting rights, and the sale of shares.
- Not legally required: But highly recommended for companies with multiple shareholders.
- Remains confidential: This agreement is kept between the involved parties.
Burger Huyser Attorneys assists clients in drafting shareholders agreements that complement the MOI while protecting shareholder interests in more specific terms.
MOI vs Shareholders Agreement: What’s the Real Difference?
Scope and Authority
- MOI: Legally binding document that defines company operations and is filed with CIPC.
- Shareholders Agreement: Private document focusing on shareholder relations and not legally required.
Legal Standing
- MOI: Overrides any conflicting clauses in the Shareholders Agreement.
- Shareholders Agreement: Cannot override the MOI or the Companies Act.
Public vs Private
- MOI: Publicly accessible.
- Shareholders Agreement: Private and confidential.
Both documents are essential for a comprehensive governance framework. When drafted properly, they work in harmony to support company stability and protect shareholder rights.
Let Burger Huyser Attorneys Simplify Corporate Governance
Understanding the difference between the MOI and a Shareholders Agreement is critical for business owners, directors, and investors. Whether you’re launching a start-up or restructuring an existing company, Burger Huyser Attorneys offers expert legal services tailored to your unique business needs.
Our Commercial Law specialists are ready to help you draft, review, or amend your MOI and Shareholders Agreement to ensure legal compliance and protect your business interests.
Take Control of Your Business Structure Today
Let Burger Huyser Attorneys guide you with expert legal advice and professional drafting services. Secure your company’s future by ensuring your MOI and shareholders agreement are aligned and compliant.
Contact Burger Huyser Attorneys today to schedule a consultation with our experienced corporate law team.
Contact Burger Huyser Attorneys, and book a consultation.
To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:
Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358;  Pretoria call 064 548 4838;
Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223
DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE
