Difference between Memorandum of Association (MOA) and Articles of Association (AOA)Company Law Notes CBCS Pattern
Memorandum of Association
Memorandum of association is the document which contains the rules regarding constitution and activities and objects of the company. It is fundamental charter of the company. Its relation towards the members and the outsiders are determined by this important document.
Section 2 (56) of the Companies Act, 2013 defines Memorandum as “Memorandum means the Memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this act”.
One of the essentials for the registration of a company is memorandum of association. It is the first step in the formation of a company. Its importance lies in the fact that it contains the fundamental clauses which have often been described as the conditions of the company’s incorporation.
Articles of Association
The Articles contain rules and regulations for the internal management of the company. They are framed with the object of carrying out the aims and object of the memorandum of association and also to monitor that the same are carried as prescribed.
Section 2 (5) of the Companies Act, 2013 defines articles as “Articles means Articles of Association of a company as originally framed or altered from time to time in pursuance of any previous law or of this act including so far as they apply to the company the regulations contain as the case may be in Table A to Schedule I of this act”
The difference between Memorandum of Association & Article of Association is given here:
|
BASIS OF DISTINCTION |
MEMORANDUM OF ASSOCIATION |
ARTICLE OF ASSOCIATION |
|
MEANING |
It is a charter of a company .It sets the constitution .It
defines limits ,powers and objects of the company |
It contains rules and regulation for the internal management of
the company |
|
OBJECTIVES |
It governs relationship with the external world i.e. creditors,
sellers, buyers & debtors |
It governs internal relationship between the members of the
company. |
|
STATUS |
It is the primary document. It is the foundation of the company. |
It is the secondary document & it is based on the memorandum
of association. |
|
ALTERATION |
It is an unalterable document. Alteration can only be done by
the permission of court |
It can be stitched according to the management a resolution is
to be passed and it is within the limits of Memorandum of Association |
|
Ultra Vires Actions |
It lays down the boundaries beyond which a company cannot work.
All such acts are illegal and they are called ultra vires acts. |
The articles are controlled by the memorandum Within it the shareholders
and the directors may make such regulations as they feel fit for internal
management. |