Company Law

Difference Between MOA And AOA – Companies Act

Meaning Of MOA 

The memorandum of association of a company-also called its ‘charter’ is the company’s principal document. If refers to that document which defines the principal conditions on which the company is incorporated. No company can be registered without a memorandum of association since it defines the rights and objectives of the company. In fact, the memorandum of association is the foundation on which the edifice of the company stands.

It also is the boundary wall within which the activities of the company must be confined. Anything done beyond what is stated in this document is deemed to be void. And any person dealing with the company must be fully conversant with what is stated in the company’s memorandum of association.

If a person makes a contract with the company about something which is beyond or contrary to what is defined in the company’s memorandum of the company is not bound by such contract. The main purpose of the memorandum of association is to inform the shareholders, creditors and others dealing with the company about the sphere of the company’s business.

Meaning Of AOA

Articles of Association is the second important document prepared by the promoters and filed with he Registrar of Companies along with other documents. This is mandatory under the provisions of the Indian Companies Act, and contains the rules that govern the management of the internal affairs of the company. The memorandum of a company defines the objects for which the company is being incorporated, whereas its articles define the procedure that is to be followed for achieving the objects. 

The memorandum of a company specifies the sphere of its activity-its articles define the limitations within which the company must function, what rules shall apply to the internal management of the company and what will be the rights of the various parties (like its officers, shareholders and debenture-holders, etc.)The articles of association of company cannot violate its memorandum of association.

Difference Between MOA And AOA

Sr. No.Basis Of DifferenceMemorandum Of AssociationArticles Of Association
1Need of RegistrationIt is mandatory to have a memorandum at the time of the company’s registration. The registration cannot be done without the memorandumit is not mandatory to prepare this document and file it with the Registrar. In case of a public limited company, the contents of Table A are taken to be the model set of articles of the company. For a private company, it is necessary to have the articles of association.
2ImportanceIt is the company’s primary document, and is also called the charter of the company.The articles of a company are a subsidiary of its memorandum.
3Subject MatterIt contains the description of fundamental objects and powers of the company.The articles define the rules and sub-rules that will govern the company’s activities in the pursuit of its objects.
4RelationshipThe memorandum establishes a relationship between the company and outsiders in the manner of there being an agreement between the two.The articles define the relationship between the company and its members.
5RegulationThe memorandum of a company is regulated by the Companies Act, 2013.The articles of a company are regulated by the Companies Act, 2013 and its memorandum of association.
6AlterationThe memorandum cannot be altered easily. Many alterations require the prior approval of the court or Company Law Board or Central Govt.The articles of a company can be altered by a special resolution.
7Legal Effect8It is assumed that any person dealing with the company is conversant with the conditions stated in its memorandum. If a person makes a contract with the company that thel memorandum does not allow, the contract cannot be disputed in a court of law.Like the memorandum, it is assumed that any outsider dealing with the company is conversant with its articles. But if there is a breach of contract by the company because of some internal irregularity of which the outsider is unaware, then he can take the recourse of law.
8Doctrine Of Ultra VirusAll actions of the company beyond the scope o27f its memorandum are deemed to be ultra vires, and cannot by ratified by the company.All actions of the company beyond the scope of its articles are also void, but they can be ratified later by the members of the company.
9GovernanceThe articles of a company cannot have any such provision that is contrary to its memorandum. In other words, the memorandum of a company is not governed by its articles. .The articles of a company are governed by what is stated in the company’s memorandum
10DefenceAny contract made with the company that goes against what is stated in its memorandum is not a valid contract by law.A contract made with the company that goes against what is stated in its articles can be a valid contract.

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Sarvesh Arora

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