Difference between Memorandum of Association and Articles of Association

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MEMORANDUM OF ASSOCIATION

Memorandum of Association is the primary document of the company. MoA must be submitted to Registrar of Companies at the time of Incorporation of the company. It is called as charter or the constitution of the company. MOA shows the relationship of the company with the outside world. MOA of a company defines the powers of a company. It shows the operations and activities of the companies. The MoA is open to the public and every person who deals with the company is expected to have a knowledge of the MoA of a company.

CONTENTS OF MEMORANDUM OF ASSOCIATION

The document Memorandum of Association consists of certain clauses as follows

  • Name Clause: The company being a legal entity should possess a name to establish its identity. The company should not have a name identical or similar name of another company.
  • Situation Clause: The MoA must contain the name of the state which the registered office of the company is situated.
  • Objects Clause: The objects clause of the MoA defines the scope of the operations and activities of the company.
  • Liability Clause: The liability clause of MoA states the liability of the shareholders.
  • Capital Clause: This clause states the capital structure of the company.
  • Association Clause: This clause contains the full details of the subscribers of the shares of the company.

ARTICLES OF ASSOCIATION

Articles of Association is the secondary document of the company. It contains the rules and regulations for governing the internal affairs of the company. These rules and regulations are prepared by the directors of the company for better management and functioning of the company. The AoA is not compulsory at the time of Incorporation of the company. The AoA states the powers of the directors of the company, employees of the company and also the powers of the shareholders of the company.

CONTENTS OF ARTICLES OF ASSOCIATION

The articles of association has following rules and regulations

⦿ It defines the structure of share capital and the rights of the different shares.
⦿ It states the powers and duties of managerial personnel and managing directors of the company.
⦿ It defines the procedures for making calls and forfeiture of shares.
⦿ It states about the rules to be followed for general meetings of the company.
⦿ It defines the common seal of the company.
⦿ It contains rules of paying commissions and rate of commissions to be paid.
⦿ It also states the procedure for winding up of the company, etc.

COMPARISON TABLE

MEMORANDUM OF ASSOCIATION ARTICLES OF ASSOCIATION
Memorandum of Association defines the powers and objectives of the company, It fixes the scope and extent of activities of the company. Articles of Association defines the rules and regulations on which company carries on its functions.
RELATION
Memorandum of Association is the document which shows the relationship between the company and the outside world. Articles of Association is the document which shows the relationship between management and members of the company.
OBLIGATION
MoA must be submitted to Registrar of Companies at the time of Incorporation of the company. The AoA is not compulsory at the time of Incorporation of the company.
CONTENT
Memorandum of Association contains 6 different clauses to show the details and objectives of the company. Articles of Association contains the different rules and regulations which are prepared by the company for better management.
ALTERATION
The alteration of the MoA cannot be easily done. It requires certain permissions from the company law board to alter the MoA. The members of the company have full control over AoA and can be easily altered by passing a special resolution in general meeting.
ACT
Memorandum of Association is defined in section 2 (28) of the Indian Companies Act 1956. Articles of Association is defined in section 2 (2) of the Indian Companies Act 1956.
SUBSIDIARY
Memorandum of Association is a controller of the company and subsidiary to the Companies Act. Articles of Association is subsidiary to both the companies Act and also to the Memorandum of Association.
BEYOND SCOPE
The things done by the company which are beyond the scope of MoA are void and illegal. The things done by the company which are beyond the scope of AoA are simply irregular and not void and can be easily ratified by shareholders.

CONCLUSION

Memorandum of Association and Articles of Association are the important documents which are necessary for every organization. Both the documents should be printed and divided into paragraphs and serially numbered. Articles of Association is signed by each member in the presence of at least one witness. In framing the AoA, the management should take utmost care to see that regulations framed cannot go beyond the powers of the company mentioned in MoA.

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