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A company must prepare certain preliminary documents before applying for company registration. The Memorandum of Association (MOA) and Articles of Association (AOA) are two such preliminary documents that every company must prepare. The MOA and AOA should be filed with the Registrar of the Companies (ROC) along with the company incorporation form.
The Memorandum of Association (MOA) and Articles of Association (AOA) define a company’s scope of work, objectives, rules and internal management. The MOA and AOA are two essential documents that are the basis of the company’s constitution. They are indispensable, and the company’s foundation stands upon them. Therefore, the founders of a company must draft them with utmost clarity and precision.
A Memorandum of Association (MOA) is a document containing details of the company’s constitution and is the foundation of the company’s structure. It is known as the charter of a company. It lays down the scope of the company’s activities, objectives for which it is formed, determine the scope of its authority and its relationship with the outside world.
The creation of an MOA is the first step towards company registration. During the formation of a company, the company members must subscribe to the MOA. Subscribing to an MOA means to put one’s mark or signature on the document as attestation or approval of its contents.
Contents of MOA
Every company’s MOA should contain the following five clauses:
The Articles of Association (AOA) of the company contains its rules or bye-laws and regulations that control or govern the conduct of its business and manage its internal affairs. The AOA is subordinate to the MOA of a company and is governed by the MOA. Every company must have an AOA as it plays a vital role in defining its internal rights, workings, management and duties. The contents of AOA should be in sync with the MoA and the Companies Act, 2013.
Contents of AOA
|Description||Defines the company’s constitution, powers, objectives, and constraints of the organisation.||Defines rules and regulations of the company. It also defines the duties, powers, liabilities and rights of individuals associated with the organisation.|
|Contents||It contains the five mandatory clauses.||It contains the provisions as per the requirements of the organisation.|
|Filing at the time of registration||It is a mandatory document that must be filed with the ROC at the time of company registration.||The drafting of AOA is mandatory. However, the filing of AOA with the ROC is optional at the time of company registration.|
|Importance and position||MOA is a supreme legal document and subordinate to the Companies Act.||AOA is subordinate to the MoA and the Companies Act.|
|The relationship between the two||MOA is a dominant document that helps in the drafting of the AoA.||Any provision in the AOA that contradicts the MoA is considered as null and void.|
|Alteration||An alteration can be made in the MOA only after passing a special resolution in the Annual General Meeting (AGM) and after obtaining prior approval from the Central Government.||An alteration in the AOA can be made by passing a special resolution in the Annual General Meeting (AGM).|
|Retrospective amendment||The MOA cannot be amended with retrospective effect.||The AOA can be amended retrospectively.|
Both the MOA and AOA are essential documents of a company. They help the company owners and founders run the company efficiently and streamline its business. Hence, they are vital documents for a One Person Company (OPC), private company or public limited company.
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