MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

ALL YOU NEED TO KNOW

DEFINITION OF MEMORANDUM OF ASSOCIATION

Memorandum of Association refers to a fundamental public charter that encloses particulars needed at the time of incorporation. Presently, MOA acts as a mandatory requirement for incorporation in India. At the time of the company’s incorporation, it needs to be registered with the Registrar of Companies. It encloses the powers, objects, and scope of the company, beyond which an organization is not permitted to operate, i.e. it imposes a limitation on the range of undertakings of the company.

Any individual who deals with the company is presumed to have read the company. i.e. they must be accustomed to the company’s objects and its area of activities.

DEFINITION OF ARTICLES OF ASSOCIATION

An article of Association is technically a secondary document, which sets out the rules and norms made by the company for its management and daily activities. Additionally, the AOA encloses the rights, obligations, powers, and duties of members of the company. It also covers details relating to the audits and accounts of the company.

Every company is required to draft AOA. But, a public company limited by shares can opt for Table F rather than AOA. It encloses all the key information relating to internal matters and the company’s management. It is drafted for the person serving the company internally, i.e. members, employees, directors, etc.

The company’s governance is done as per the rules cited in it. The companies can draft their article of associations according to their requirement.

DIFFERENCES BETWEEN MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

The major differences between memorandum of association and articles of association are given as under:

1. A Memorandum of Association is a document that contains all the conditions which are required for the registration of the company. Articles of Association is a document that contains the rules and regulations for the administration of the company.
2. Memorandum of Association is subsidiary to the Companies Act, whereas Articles of Association is subsidiary to both Memorandum of Association as well as the Act.
3. In any contradiction between the Memorandum and Articles regarding any clause, the Memorandum of Association will prevail over the Articles of Association.
4. Memorandum of Association contains information about the powers and objects of the company. Conversely, Articles of Association contain information about the rules and regulations of the company.
5. The Memorandum of Association must contain the six clauses. On the other hand, Articles of Association are framed as per the discretion of the company.
6. A Memorandum of Association is obligatory to be registered with the ROC at the time of registration of the Company. As opposed to Articles of Association, is not required to be filed with the registrar, although the company may file it voluntarily.
7. A Memorandum of association defines the relationship between the company and external parties. On the contrary, articles of association govern the relationship between the company and its members and also between the members themselves.
8. When it comes to scope, the acts performed beyond the scope of the memorandum are absolutely null and void. In contrast, acts done beyond the scope of articles can be ratified by unanimous voting of all shareholders.