How does an MOU Work?
An MOU is an expression of agreement to continue or proceed. It symbolizes that the parties have reached an agreement and progressing ahead with their business relationship. Although it is not legally binding, it is an earnest declaration that a contract is imminent.
Benefits of MOU
Establishes a Common Intention
- With any business dealing, it is paramount that both parties understand each other's goals and objectives.
- An MOU can be a great asset to your business relations.
- It is highly beneficial with clear terms and effective communication and dealings.
Reduces Risk of Uncertainty
- Business negotiations can be rocky and uncertain at times. They can be particularly hazy at the beginning of relations between the parties.
- There is nothing worse than disagreeing with the business partner over contract terms.
- Hence, MOU’s provide a great safeguard to reduce the risk of uncertainty in expectations and objectives.
Records Prior Agreements
- Often during negotiations, two or more parties agree on certain terms which would then appear in the future contract. If a party retracts or forgets these terms, MOU comes handy.
- Although the document is not legally binding, it is useful as it records what has been agreed upon during negotiations.
- Therefore, this provides a clear understanding of the parties as their common objectives.
The Ease of Ending Engagements
- An MOU can facilitate positive relations between parties as terms are set out. An MOU is a great starting point that establishes what both parties want to achieve out of the agreement.
- Therefore, if you want to exit the agreement after the contract is formed, a formal termination process must be ensured. This can be more complicated, stressful and sometimes expensive.
Provides a Framework for Future dealings
- An MOU can put our minds at ease. Having the proposed terms already set out in a prior document provides a framework for future dealings.
- The MOU can also be referred back to as a reminder of the parties’ objectives and intentions if any confusion arises.
Secures The Partnership:
The master service agreement envelopes an entire relationship between the business owner and the client, covering all facets of the agreement that is likely to emerge. Such a contract is an advantage for anyone beginning a long-standing association with a dealer or a client.
Time-Saving
A master service agreement promotes a structure to consider and work out terms and requirements. So, the same conditions need not be continuously bargained for deals that are identical or associated with one another.
Documents required for Memorandum of Understanding
In India, Memorandum of Understanding cannot be done without proper identity and address proof. These documents will be needed for all the directors and the shareholders of the company to be incorporated. Listed below are the documents that are accepted by MCA for the online company registration process acceptable.
Identity And Address Proof
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
- Scanned passport-sized photograph specimen signature (blank document with signature [directors only])
For the foreign nationals, an apostilled or notarized copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
Registered Office Proof
For online company registration in India, the company must have a registered office in India. To prove admittance to the registered office, a recent copy of an electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/his consent to use the office as a registered office of the company should be submitted.
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
- Scanned copy of Notarized rental agreement in English
- Scanned copy of No-objection certificate from the property owner
- Scanned copy of sale deed/property deed in English (in case of owned property)
Note: Your registered office need not be a commercial space; it can be your residence too.
