Q.Distinguish between Memorandum of Association and Articles of Association.
The Memorandum of Association (MOA) and the Articles of Association (AOA) are the two constitutional documents every company must have, but they serve different purposes and stand in a clear hierarchy to each other.
The Memorandum of Association is the company's charter. It is filed with the Registrar of Companies at incorporation and contains the Name Clause, Registered Office Clause, Object Clause, Liability Clause, Capital Clause, and Subscription Clause. It defines the company's very existence, the scope of activities it may lawfully undertake, and its relationship with outsiders — an act by the company beyond what the Memorandum permits is "ultra vires" and void, and cannot be validated even if every member of the company agrees to it.
The Articles of Association, by contrast, are the company's internal rule-book. They govern matters such as the issue and transfer of shares, calls and forfeiture of shares, the appointment and powers of directors, the conduct of meetings and voting, the declaration of dividends, accounts and audit, and the procedure for winding up. The Articles regulate the relationship between the company and its members, and among the members themselves, rather than the company's relationship with the outside world.
Because of this difference in role, the Memorandum is the supreme document — the Articles can never override anything in the Memorandum, and any article that conflicts with it (or with a mandatory provision of the Companies Act, 2013) is invalid to that extent. The Memorandum is also comparatively harder to alter (particularly its Object Clause), while the Articles can usually be changed more easily, generally by the members passing a special resolution.
| Basis | Memorandum of Association | Articles of Association |
|---|---|---|
| Nature | The company's charter; defines its existence and scope | The company's internal rule-book; regulates internal management |
| Relationship governed | Company's relationship with outsiders | Relationship between the company and its members, and among members |
| Position | Supreme document — Articles cannot override it | Subordinate to the Companies Act and the Memorandum |
| Contents | Name, Registered Office, Object, Liability, Capital, Subscription clauses | Rules on shares, directors, meetings, dividends, accounts, winding up |
| Ease of alteration | Difficult; strict procedure, especially for the Object Clause | Comparatively easier; usually by special resolution |
| Acts beyond it | Ultra vires the company — void, cannot be ratified | Ultra vires the Articles but intra vires the Memorandum — can usually be ratified |
The Memorandum of Association is the company's charter defining its scope and relationship with outsiders and is the supreme document; the Articles of Association are the internal rule-book governing management and the relationship among members, and are subordinate to both the Memorandum and the Companies Act, 2013.
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