The two foundational papers required for incorporating a corporation are the Memorandum of Association (MOA) and the Articles of Association (AOA). The MOA is the company’s constitution document, which includes all of its essential details, while the AOA is a document that covers all of the company’s internal management rules and regulations.
In this article, we have gone over the features of both documents in detail and presented a detailed comparison for your clear and full comprehension.
What is a Memorandum of Association (MOA)?
The Memorandum of Association (MOA) is regarded the Company’s constitution or Charter because it contains all of its key legal facts, such as its name, address, purpose of existence, capital, and shareholders’ liabilities. The document was drafted by the company’s directors and signed by all of its shareholders. It is submitted to the ROC for registration as part of the company’s incorporation.
The Memorandum of Agreement (MOA) of an established firm is a publicly accessible document, with all of its data available for public verification and scrutiny. As a result, a corporation cannot be founded in the absence of a Memorandum of Association (MOA). The MOA describes the company’s objectives, powers, and scope beyond which it is not permitted to operate, so limiting the scope of the company’s activities. Every company member and official, including shareholders, creditors, and investors, should be familiar with the MOA to grasp the firm’s general scope and objectives.
What is the AOA (Association and Articles of Association)?
AOA is a legal document that describes the company’s rules and regulations for internal administration and day-to-day operations. In this context, the Articles of Association specify the rights, responsibilities, powers, and duties of the company’s members and directors, as well as how a corporation should keep its accounting and audit records.
All companies should draft their Articles in a way that is specific to their needs and expectations. The company’s directors draft the document, which is then signed by all of its shareholders. The AOA, like the MOA, must be presented to the ROC upon incorporation of the company. After incorporation, even the MOA becomes public and can be viewed and inspected.
What is the distinction between MOA and AOA?
The key differences between MOA and AOA are as follows:
- The first distinction between MOA and AOA is that the former specifies the company’s authorities and purposes, whereas the latter establishes its rules.
- In the event of a conflict between the Memorandum and the Articles of Incorporation regarding any provision, the Memorandum of Association shall take precedence over the Articles of Association.
- The memorandum of association details the company’s rights and aims. In contrast, articles of association contain information regarding the company’s rules and regulations.
- To alter the MOA, a special resolution must be passed at the Annual General Meeting with prior approval from the central government, whereas amendments to the AOA can only be done through a Special Resolution (SR) at the AGM.
- At the time of establishment, the MOA must be registered with the Registrar of Companies. In the case of AOA, the corporation is not forced to meet such conditions, but there is an option for voluntary registration.
MOA & AOA Difference table
| Points of Difference | Memorandum of Association | Articles of Association |
|---|---|---|
Objective | The major objective of creating the MOA of a Company is to define the relationship between the Company, its shareholders, all third parties. | The major objective of creating the AoA of a Company is to define the relationship between the company and its internal management. |
Purpose | The MOA contains all the foundational legal information about the company available with the ROC, like its name, registered address, capital, liability, and primary business activity. | The AOA contains the rules, regulations, and procedures involved in the internal management of the company. |
Legal Provisions | Section 4 of the Companies Act deals with the provisions for MOA of a Company. | Section 5 of the Companies Act deals with the provisions for AOA of a Company. |
Supremacy | The MOA is drafted in accordance with the provisions of the Companies Act, 2013. So, beyond the Act, the MOA is the most supreme document of the company, and any other draftings or filings cannot contain any information or provision which violates the content of the MOA. | The AOA is drafted in accordance with the Companies Act, 2013, and the MOA of the Company. So, it cannot contain any provisions which violate the provisions of the Companies Act, or the MOA of the Company. |
Structure & Content | The content of the MOA is divided into 6 different clauses, containing specific information in each of these clauses. Among these clauses are, the name clause containing the legal name of the company, the situation clause containing its registered address, the objective clause containing all its business activities, the clauses for liability and capital containing details regarding the liabilities of the shareholders and their capital subscription respectively. | The format of AOA is categorized into different tables, applicable for different kinds of companies. For instance, the AOA of a Company limited by shares is drafted according to TABLE F format. Further, each of these tabular formats are divided into articles containing the rules and regulations for the internal management of the company. |
Applicability | It is mandatory for all types of companies to draft their Memorandum of Associations in the prescribed formats and submit to the ROC during their incorporation. | Although it is mandatory for all types of companies to draft their Articles of Associations, it is not mandatory to submit the same to the ROC during incorporation. |
Source of table: https://www.setindiabiz.com/learning/difference-between-moa-and-aoa#:~:text=The%20MOA%20contains%20all%20the,internal%20management%20of%20the%20company.
