Articles of Association vs. Memorandum of Association

Attribute	Articles of Association	Memorandum of Association
Definition	Document that contains the rules and regulations for the internal management and operation of a company.	Document that defines the company's constitution, objectives, and powers.
Legal Requirement	Required by law for every company to have.	Required by law for every company to have.
Contents	Contains rules regarding the company's internal affairs, such as the rights and responsibilities of shareholders, directors, and officers.	Contains the company's name, registered office address, objectives, and details of its shareholders and share capital.
Amendment	Can be amended by passing a special resolution and filing the updated version with the relevant authorities.	Can be amended by passing a special resolution and filing the updated version with the relevant authorities.
Public Access	Can be accessed by the public upon request and payment of a fee.	Can be accessed by the public upon request and payment of a fee.
Relationship	Subordinate to the Memorandum of Association.	Primary document that governs the company's activities and powers.

Introduction

When establishing a company, there are several legal documents that need to be prepared and filed. Two of the most important documents are the Articles of Association and the Memorandum of Association. While both documents are essential for the functioning and governance of a company, they serve different purposes and contain distinct attributes. In this article, we will explore and compare the attributes of Articles of Association and Memorandum of Association.

Definition and Purpose

The Memorandum of Association, often referred to as the "Memorandum," is a legal document that outlines the company's fundamental characteristics, objectives, and powers. It defines the company's relationship with the outside world and acts as a constitution for the company. On the other hand, the Articles of Association, also known as the "Articles," are the internal regulations and rules that govern the company's day-to-day operations, management structure, and decision-making processes.

Content and Scope

The Memorandum of Association typically includes the company's name, registered office address, objectives, authorized share capital, liability of members, and association clauses. It sets out the company's main purpose and the extent of its powers. On the other hand, the Articles of Association cover a broader range of topics, including the appointment and removal of directors, their powers and responsibilities, shareholders' rights and obligations, share transfer procedures, dividend distribution, and general meeting requirements.

Flexibility and Amendment

One of the key differences between the Memorandum of Association and the Articles of Association lies in their flexibility and amendability. The Memorandum is considered a more rigid document, as it defines the company's fundamental characteristics and objectives, which cannot be easily changed. Any amendments to the Memorandum require a special resolution and must comply with legal requirements. Conversely, the Articles of Association are more flexible and can be amended by passing an ordinary resolution during a general meeting, subject to the provisions of the Companies Act and the company's own Articles.

Public Access and Confidentiality

Another important distinction between the Memorandum of Association and the Articles of Association is their accessibility to the public. The Memorandum is a public document that can be accessed by anyone, including potential investors, competitors, and the general public. It is filed with the Registrar of Companies and can be obtained through a public search. On the contrary, the Articles of Association are considered an internal document and are not required to be filed with the Registrar. They are accessible only to the company's members and are not available for public scrutiny.

Binding Nature

While both the Memorandum of Association and the Articles of Association are legally binding documents, they have different levels of binding nature. The Memorandum has a binding effect on both the company and its members, as it defines the company's relationship with third parties. Any act of the company that falls outside the scope of the Memorandum is considered ultra vires and may be challenged in court. On the other hand, the Articles primarily govern the internal affairs of the company and have a binding effect on the members and the company itself. They provide a framework for the company's operations and the rights and obligations of its members.

Relationship and Interplay

It is important to note that the Memorandum of Association and the Articles of Association are interrelated documents that work together to govern a company. The Memorandum sets out the company's fundamental characteristics and objectives, while the Articles provide the detailed rules and regulations for the company's internal management. In case of any conflict between the two documents, the Memorandum usually takes precedence. However, the Articles can supplement and expand upon the provisions of the Memorandum, as long as they do not contradict its fundamental clauses.

Conclusion

In summary, the Memorandum of Association and the Articles of Association are two distinct legal documents that serve different purposes in the governance of a company. While the Memorandum outlines the company's fundamental characteristics and objectives, the Articles provide the internal regulations and rules for the company's day-to-day operations. The Memorandum is more rigid and less amendable, while the Articles are more flexible and can be easily modified. The Memorandum is a public document, while the Articles are confidential and accessible only to the company's members. Both documents are legally binding, but the Memorandum has a broader binding effect on the company's relationship with third parties. Understanding the attributes and differences between these two documents is crucial for establishing and managing a company effectively.