Difference Between MOA and AOA

Introduction

Every entrepreneur anticipates the initial step of starting a business, which involves creating a legal entity through company registration. Companies operate under the guidance of key legal documents that define their permissible activities and restrictions. The Memorandum of Association (MOA) delineates the company’s range of activities and its relationship with the outside world, while the Articles of Association (AOA) specifies the rules for the company’s internal governance. Understanding the difference between MOA and AOA is crucial as they collectively establish the framework and operational guidelines that are essential for the formation of a private limited company

MOA (Memorandum of Association)

For the company registration Memorandum of Association is one of the important documents. All of the activities in which the company is engaging need to be mentioned under MOA. In simple terms, the Memorandum of Association creates a bridge between the company, its activities, and its relationship with the shareholders. The company is liable to perform only those acts which are mentioned in the MOA.

Memorandum of Association comprises of the following clause

• Name clause – All the company-related information that is, the name of a company on the top of an article, whether a company is an LLP or a public limited, industry in which the company continues its functioning needs to be mentioned.
• Liability clause – This clause contains all the information regarding member liability in the company, if a company is registered under unlimited liability then this clause can be skipped by the company.
• Situation clause – In this clause information regarding the company’s registered office is mentioned, in any case, if the company changes its registered office then the same needs to be updated in the clause.
• Capital clause – This clause establishes the maximum amount of capital that a corporation can raise, as well as the allocation of the distribution of shares. The privileges and rights which are been given to the shareholders are mentioned in the capital clause.
• Object clause – This clause establishes the reason for the company’s formation. This is not generally changed or altered. As a result, the design of this section is quite important and should be done with care and knowledge. The corporation is prohibited from engaging in any activity that is not covered by the MOA’s object clause. Such acts are referred to as Ultra Virus (beyond abilities) and are not ratified by members.
• Subscription clause – This clause contains the initial subscribers’ names, addresses, and contact information. At least two people are required to form a private limited business. A public limited company must have at least seven members. These subscribers are required to take at least one share.

AOA (Articles of Association)

This is a supplementary document that defines the internal workings of the organization, as well as their management, rights, and responsibilities. It contains a company’s by-laws as well as other rules and regulations. The AOA’s content is consistent with the MOA and the Companies Act.

These abilities cannot be relinquished by a company. The article can be changed to address issues about which the memorandum is silent. For this, a special resolution is required to make the change.

Below is the content of the Articles of Association

• Information related to the shares of a company – In detailed information related to the conversion, transfer, forfeit of shares. Rules regarding the conversion of fully paid shares and minimum subscription.
• Information on director’s duties, right, and removal – In these documents, there is detailed information related to the duties, powers, and appointments. Apart from this information on the procedure of removing directors and borrowing rights of the board of directors.
• Information on conducting meetings and holdings – Sending out notices, conducting meetings, and maintaining minutes describe in detail. Rules related to the proxy, voting rights, and the required percentage of votes of a director will be mentioned.
• Rules and process of winding up of the company – If it is in the best interests of the company, changes to the articles can be made. However, this should not conflict with any third-party agreements. This is done by passing a special resolution and filing a copy with the Registrar within 30 days of the resolution’s passage. Such a change should not enhance the existing members’ liabilities in any manner.

Difference between MOA and AOA

Conclusion

The difference between MOA and AOA is that they have different purposes. The AOA tells us who does what in a company, and the MOA shows us how things are done. In simple terms, the AOA is about people’s roles and responsibilities, while the MOA is about the steps and plans to achieve goals.