Business

Difference Between Memorandum of Association and Articles of Association

Memorandum of Association
• It is a fundamental charter of the company which defines its objects and power.
• It is the nature of the contract between the company and the outside world i.e. debenture holders, bankers and creditors etc.
• It is the most important document of the company so it is called a primary document.
• It contains the aims, objects and conditions upon which the company is granted incorporation.
• It is compulsory for every company to have its Memorandum of Association. So it must be filed with the registrar’s office for its registration before the incorporation of the company.
• It is regarded as an unalterable document. However, it may be amended by special resolution and with the sanction of the court or central government.
• If there is any disagreement between Memorandum and Company Ordinance the provisions in the ordinance, will hold good.
• It defines the limit beyond which the company cannot operate. This limit must include the provision of the company ordinance.
Articles of Association
• It contains the rules and regulations for the internal management and administration of the company.
• It does not create any type of contract but it establishes a relation between the company and the inside persons.
• Its importance is considered next to the memorandum so it is known as a secondary document of the company.
• It sets forth the provision by which the powers and aims described in the Memorandum are carried into effect.
• It may or may not be submitted to the registrar for its registration. Company limited by shares may be incorporated without the Articles of Association of their own. So Table “A” of the companies ordinance will be considered its “Articles.”
• Priority is not given by the Company ordinance to the Articles over Memorandum Association. In case of conflict with Memorandum, the provisions of Memorandum will be considered as valid.
• It is the subsidiary to the memorandum and it cannot contain any provision contrary to the clauses of the memorandum.

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