While the memorandum of association works as a charter that defines the scope and limitations of the company, an article of association functions as a legal document that lays down rules regarding the management of the company. The Memorandum helps to define the relationship that the company has with its members and the rights those members have. In this blog, let us see the difference between article of association and memorandum of association.
What is the meaning of Memorandum?
As per Section 2(56) of the Companies Act, 2013 a ‘memorandum‘ refers to the original memorandum of association that a company registered or an altered one that follows the rules laid down in the Companies Act. Let us further look into the memorandum of association contents.
Clauses in MOA / Contents of the MOA (Memorandum of Association)
Section 4 of the Companies Act, 2013 states that an MOA should contain the following clauses and details.
Name Clause
This clause contains the company’s name ending with a “Limited” if it is a public company and with “Private Limited” in the case that it is a private limited company.
Situation Clause
This dictates in which State and registered office the company is to be situated and defines the geographical constraints of the company.
Object Clause
This clause gives an idea about the objects that the company deals in and may be altered as the company expands to include and incorporate more objects.
Liability Clause
This mentions the liability of the company’s members whether it be limited, unlimited, or state-owned.
When shares limit the company, its liability refers to the unpaid amount corresponding to the shares they hold
If a company limited by guarantee, then the liability is the amount each member promises to contribute—
This could include assets of the company if the company shuts down while he or she remains a member or within one year after they retire.
They are liable to pay off debts and liabilities of the company which was undertaken when they were a member of the company.
They are also responsible for the costs and charges incurred due to the winding-up and even for distributing the contributions as per the regulations.
Capital Clause
It defines the amount of capital invested, the number of shares registered and how the shares have been divided. If it is a One Person Company, then the founder becomes a member of the company.
Name in MOA (Memorandum of Association)
The name in the memorandum needs to follow the below-mentioned rules.
It cannot be –
Identical or resemble an existing company’s brand name closely.
The one that is being used by another company.
One that is offensive under any law.
A name that is undesirable as per the Central Government’s decree.
Or may not be registered with a name which contains—
Any word that might make it sound like it has any connection to the Central Government or patronage of any State Government.
Any word as described in the Companies (Incorporation) Rules, 2014 unless they have sought approval from the Central Government prior to the registration.
Type of MOA (Memorandum of Association)
The memorandums are of th