Memorandum vs Articles of Association Explained

Introduction

The Memorandum of Association (MOA) and Articles of Association (AOA) are two important legal documents of a company. They define the company's purpose, powers, and internal rules. Below is a simple comparison to understand the difference clearly.

Memorandum of Association (MOA)

The Memorandum of Association defines the identity and scope of the company. It shows what a company can and cannot do.

Key Points:

• Acts as the company's constitution.
• Defines the company's main objectives.
• Determines the company's relationship with outsiders.
• Limits the company's powers.

Main Clauses in MOA:

• Name Clause
• Registered Office Clause
• Object Clause
• Liability Clause
• Capital Clause

Example:

If a company is registered to run a real estate business, it cannot start a pharmaceutical business unless the object clause in the MOA is changed.

Articles of Association (AOA)

The Articles of Association contain the rules and regulations for managing the company's internal affairs.

Key Points:

• Acts as the company's rulebook.
• Governs internal management.
• Defines rights and duties of directors and members.
• Share capital and directors.

Can be changed easily as per legal procedure.

Main Contents of AOA:

• Share issue and transfer rules
• Powers and duties of directors
• Meeting procedures
• Dividend policy

Example:

The AOA may specify how directors are appointed or how voting will take place during meetings.

Key Differences Between MOA and AOA

Basis	Memorandum of Association (MOA)	Articles of Association (AOA)
Purpose	Defines scope and objectives	Defines internal rules
Focus	External affairs	Internal management
Power	Supreme document	Subordinate to MOA
Change	Difficult to alter	Easier to alter
Scope	What company can do	How company operates