Explain the difference between memorandum of association and articles of association on any five bases

cbse
formsofbusiness

#1

Following are the differences between MOA and AOA:

  1. Nature: MOA is the charter of a company indicating the objects and conditions on which the company is granted incorporation. It defines nature of business, objects of capital, structure of the company. On the other hand, AOA specifies rules and regulations of the company which are observed in conducting its internal affairs.
  2. Contents : Contents of MOA basically specify areas of operations of the company beyond which it cannot go. Contents of AOA deal with internal matters, laws, by-laws of the company.
  3. Relationships defined : MOA defines external relationship i.e., the relationship between the company and the outsiders. AOA defines internal relationship i.e., the relationship between the company and its members.
  4. Status : MOA, being the charter or constitution of the company, is subordinate only to the Companies Act while AOA is subject to subordination to both the Companies Act and MOA.
  5. Violation : Any act of the company in violation of
    MOA is ultra vires and void even if it is ratified by all members of the company. Any act of the company in violation of the AOA can be ratified by majority of members of the company.