Q."The Articles of Association are subordinate to the Memorandum of Association." Explain this statement.

This statement captures the hierarchy between a company's two charter documents, and it is central to understanding how conflicts between them are resolved.

To say the Articles are subordinate to the Memorandum is to describe the precise hierarchy the Companies Act, 2013 establishes between a company's two charter documents. The Memorandum is the document that brings the company into being with a defined identity, defined objects, and a defined scope of lawful activity; it is, in effect, the source of the company's powers. The Articles, by contrast, do not create any new power for the company — they only regulate how the powers the Memorandum has already conferred are to be exercised internally, through rules about meetings, share transfer, and the conduct of directors.

Because the Articles derive their whole field of operation from the powers the Memorandum defines, they logically cannot be permitted to expand, contradict, or override what the Memorandum itself provides. If a company's Articles were to purport to authorise an activity outside the objects stated in its Memorandum, that Articles provision would simply be ineffective — the Memorandum's objects clause continues to set the outer boundary, and no internal rulebook can widen it. Similarly, if the Articles were to conflict with a specific condition the Memorandum lays down (for instance, as to the manner in which capital may be altered, where the Memorandum itself addresses that), the Memorandum's condition prevails, and the Articles provision is void to the extent of the inconsistency. …

Students sometimes think the more recently registered or more recently amended document automatically prevails — subordination is fixed by the Act itself (Memora …