Articles of Association and Memorandum of Association - Differentiation

  • October 07, 2023
  • Registrationwala
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If anyone wants to set up a company, then there are two important documents that are a must to incorporate a company, these documents are an Article of Association (AoA) and Memorandum of Association (MoA). The MoA and AoA must be submitted to the Registrar of Companies at the time of company incorporation with the application form. 

Also, these documents are also known as the ‘constitution of a company’ and every company’s base stands on these documents. However, the company can only follow the rules, and regulations mentioned in MoA and AoA. Any decision taken out of the defined rules will not be considered. Below the complete information about the Memorandum of Association and Articles of Association is provided.

What is an Articles of Association (AoA)?

The Articles of Association (AoA) is a set of legal documents that a company files to a government body to establish a corporation officially. This is also known as a certificate of incorporation and corporate charter. Basically, this is a document that is made available to public records, through this the public can explore any information regarding the company.

However, the AoA is a part of MoA or you can say it’s a subordinate of MoA. So, every company must have an AoA to define the company’s nature, internal rights, working, duties and management. Accordingly, the articles of association is created with a memorandum of association to form the company’s constitution together. So, these incorporation documents must be submitted at the time of registering the company. In AoA, the responsibilities of the directors, and the power distribution among shareholders, officers and directors.

What is Included in Articles of Association?

In the legal document, the basic information about the company is included and this information is as follows:

  1. Name of corporation.
  2. Name and address of the registered agent.
  3. Valuation of intellectual rights.
  4. Appointments of directors; show whether a shareholder dominates or shares equality with all contributors.
  5. Directors meetings and management decisions.
  6. Transferability of shares or special voting rights of a Chairman.
  7. Process of winding up the company.

What is a Memorandum of Association (MoA)?

A memorandum of association represents the charter of a company and it is prepared during the formation and registration of the company. So, the document defines the relationship of the company with the shareholders and defines the objectives or purposes for which the company is formed. Similarly, the activities which are mentioned in the memorandum can only be done by the company.

Basically, the MoA defines the boundaries for the company's decisions and goals. In case the company does not follow the boundaries of MoA, the actions will be considered ultra vires and void. So, following the MoA is important as the structure of the company is written in a detailed manner in the MoA.

Similarly to the AoA, the MoA is also a public document which anyone can get by paying a prescribed fee to the Registrar of Companies (RoC). Through this, the creditors, shareholders or any other person can know about the rights and powers the company is offering before entering into the company. The MoA must be signed by at least 2 subscribers in the case of a private limited company and 7 members in the case of a public limited company.

Difference Between AoA and MoA

The following is the point of difference between an Article of Association and a Memorandum of Association.

Point of Difference

Memorandum of Association

Article of Association

Description

All of the company’s constitution, powers and objectives are mentioned in the MoA.

Contains all the rules and regulations of the company. Also defines the duties, liabilities, powers and rights of the people associated with the organisation.

Contain

The MoA contains five mandatory clauses.

The AoA has all the provisions which are required of the organisation.

File

MoA must be filed to the Registrar of Companies at the time of company registration.

Completing the draft of AoA is important but it is not compulsory to file an AoA to the Registrar of Companies at the time of company registration.

Relationship Between AoA and MoA

The MoA is the main document that helps in the drafting of the AoA.

If any provision of AoA contradicts the provisions of the MoA, then it is considered null and void.

Importance

MoA is a major document and a subordinate of the Companies Act.

AoA is a subordinate of the Memorandum of Association and Companies Act.

Alteration

The Memorandum of Association can be altered after passing a special resolution in the Annual General Meeting (AGM). Also, prior approval is required from the Central Government.

To alter an AoA, pass another special resolution in the Annual General Meeting (AGM).

 

Key Takeaway

Lastly, the Memorandum of Association and Articles of Association both are important incorporation documents of a company. These documents help businesses run smoothly and efficiently. All the duties, roles and responsibilities of directors, and shareholders are mentioned in the documents to avoid any confusion in the future. So, MoA and AoA are necessary for One Person Company (OPC), private limited company or public limited company.

 

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