Memorandum of Association and Article of Association
A company must prepare certain preliminary documents before applying for company registration. The Memorandum of Association (MOA) and Articles of Association (AOA) are two such preliminary documents that every company must prepare. The MOA and AOA should be filed with the Registrar of the Companies (ROC) along with the company incorporation form.
The Memorandum of Association (MOA) and Articles of Association (AOA) define a company’s scope of work, objectives, rules, and internal management. The MOA and AOA are two documents that are the basis of the company’s constitution. They are very important, and the company’s foundation stands upon them. Therefore, it should be drafted with clarity and precision.
Memorandum of Association (MOA) of a Company
A Memorandum of Association (MOA) is a document containing details of the company’s constitution and is the foundation of the company’s structure. It is known as the charter of a company. It lays down the scope of the company’s activities, objectives for which it is formed, determine the scope of its authority and its relationship with the outside world.
The creation of an MOA is the first step towards company registration. During the formation of a company, the company members must subscribe to the MOA. Subscribing to an MOA means to put signature on the document as approval of its contents.
Contents of MOA
Every company’s MOA should contain the following five clauses:
01.Name clause
Name should not be similar to existing company or trademark and must not be contrary to any law.
02.Registered office clause
This clause specifies the state in which the company is situated.
03.Object clause
This clause specifies the purpose for which company is formed.
04.Liability clause
This clause specifies the liability of members i.e. how much they will pay in case of winding up.
05.Capital clause.
This clause specifies amount of capital with which the company is formed.
Articles of Association (AOA) of a Company
The Articles of Association (AOA) of the company contains its rules or byelaws and regulations that control or govern the conduct of its business and manage its internal affairs. The AOA is subordinate to the MOA of a company and is governed by the MOA. Every company must have an AOA as it plays a vital role in defining its internal rights, workings, management, and duties. The contents of AOA should be in accordance with the MOA and the Companies Act, 2013.
Contents of AOA
Details regarding the share capital
Details of director’s qualification, appointment, powers, remuneration, duties etc.
Rules regarding company dividends and reserves
Details regarding company accounts and audit
Provisions relating to the company’s borrowing powers.
Provisions relating to conducting meetings.
Process of winding up of the company.
