Memorandum of Association (MOA) is the main, compulsory document required for the incorporation of the company. It must be registered with the ROC (Registrar of Companies) at the time of incorporation. It lays down the objects, scope, powers and area of operation of the company, all of which the company can’t transgress. Thus, it lays down the limits of the company.
It must be drafted very carefully as the company can’t go against it later. Moreover, it can only be amended by a difficult procedure in the Annual General Meeting with the knowledge of the Central Government. It can’t be amended retrospectively.
It guides all relations within and outside the company by laying guidelines and rules for the same and all the subordinate documents and agreements follow from it. Also known as the ‘charter of the company’, it must lay down the following six conditions:
– It is meant to register the official name of the company with the CG (Central Government) which must be original and must not, in any way, resemble that of a pre-existing one.
– It deals with highlighting the name of the state in which the company’s registered office is located.
– The main and auxiliary objects of the company are specified here.
Articles of Association (AOA) is a secondary document that is constituted only after the MOA. It lays down the rules and regulations for the administration and management of the company. The articles lay down the right, responsibilities, powers, duties, etc of the members along with information regarding the accounts and audit of the company.
It is mostly advisable for every company to have its own article but a company limited by shares can adopt Table A for the same purpose. It is made to guide the working and governance inside the company.
It follows the MOA and can’t contradict it. It is easier to amend than MOA which can be done without any restrictions. It can be amended retrospectively in the Annual General Meeting as per the choice of the company.
Since both these documents sound similar, people often get confused between the two. You must not make that mistake. Make sure you get legal help in order to understand the true dynamics of both and to draft a copy for your company. In the meantime, here are some of the key differences between the two you must keep in mind.