Everyone wants to earn money. Some earn it via their job, and some earn it via business. And when you want to start a business, it becomes compulsory to get your business registered. No matter whether it is a big business or a very small one, we have to get it registered. Before applying for company registration, the company owner must prepare certain necessary documents. Without these documents, registration can’t be possible.
In this article, we will explain to you about Articles of Association (AOA) and Memorandum of association (MOA).
Did you know?
MOA and AOA are the foundational documents on which a company stands. MOA contains all the data required for company incorporation. On the other hand, AOA contains the rules and the regulations a company needs to follow.
Two main documents are required for the company registration. They are:
- Articles of Association (AOA)
- Memorandum of Association (MOA)
The company should file the business registration application at the Registrar of Companies (ROC) along with the company incorporation form, MOA and AOA.
As we’ve mentioned earlier, the Articles of Association and Memorandum of Association define your company’s key features, its rules and regulations and internal management. The MOA and AOA are two fundamental documents of the company. These documents are indispensable, and your organisation's establishment remains upon them. So, the directors of an organisation or the company owner must draft these two documents with utmost clarity and precision. If there is any mistake, you won’t be able to get your business registered.
Memorandum of Association
A Memorandum of Association (MOA) is a document that contains all the details of the company’s incorporation, and it is the main document that clearly projects its structure. This MOA is also known as the charter of a company. This lays down the scope of the company’s activities and the objectives for which you are starting this company and determines the scope of its authority and its relationship with the outside world.
This is the first document to be submitted for your company’s registration.
Contents of MOA
Every company’s MOA should contain the following five clauses:
- Name clause: The company will have a name of its own to project its identity. The public company’s name will end with the word public limited, and in the case of a private company, the name of the company name will end with the word Private Limited.
- Registered office clause: According to Section 12 of the Indian Companies Act, within 15 days of the company’s incorporation, the company must have a registered office to which all communications and notices may be sent.
- Object clause: The Memorandum of Association should determine the item for which the organisation is proposed to be joined and any matter considered essential in the promotion thereof.
- Liability clause: The liability of an organisation, whether restricted or limitless, should be determined in the Memorandum of Association under the Liability clause.
- Capital clause: This clause will state the capital amount with which the company is registered.
- Subscription clause: The subscribers to the Memorandum of the company have to take at least one share of the company.
Articles of Association
The second most important document required for your company registration is the Articles of Association (AOA). This is the document that farms rules, regulations and guidelines that control or administer the business. The AOA is subordinate to the MOA of an organisation. Each organisation should have an AOA as it assumes a fundamental part in characterising its inner functions and obligations. The contents of the AOA should be in sync with the MOA and the Companies Act, 2013. Thus, you also require AOA to get your business registered.
Contents of AOA
- Adoption of preliminary contracts.
- Share capital, variation of rights, number and value of shares it holds.
- Issue of preference shares.
- Allotment of shares.
- Calls on shares.
- Lien on shares.
- Transfer and transmission of shares.
- Forfeiture of shares.
- Alteration of capital.
- Share certificates.
- Conversion of shares into stock.
- Voting rights and proxies.
Also Read: Legal Name and Trade Name Based on GST
The distinction between Memorandum of Association and Articles of Association
As we know, these two documents are the most important documents for registering a company and count as the foundation for it. Now we will tell you a few differences between MOA and AOA.
- A Memorandum of Association (MOA) defines the company’s constitution, its powers, its objectives, and the constraints of the organisation. While on the other hand, the Articles of Association (AOA) define the rules and regulations of the company. It also defines the responsibilities, duties, powers, liabilities, and rights of individuals associated with the business which you are going to start.
- MOA contains the five mandatory clauses, and on the other hand, AOA contains the provisions as per the business requirements.
- MOA is a mandatory document filed with the registrar of companies (ROC) at the time of registration. The filing of AOA with the ROC is optional at the time of company registration.
- MOA is an authoritative record, and it is subordinate to the company's act. At the same time, AOA is subordinate to the MOA.
- MOA is a document that helps draft the AOA. Any arrangement in the AOA that goes against the MOA is viewed as invalid.
- 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 of India. An AOA can be altered by passing a special kind of resolution in the Annual General Meeting (AGM).
- The MOA cannot be amended with retrospective effects. While on the other hand, the AOA can be amended retrospectively.
Both the MOA and AOA are fundamental documents of an organisation. They assist the founders of an organisation in running it smoothly. Without these documents, you will not be able to register your company. So, before starting any business or a company, you have to get it registered, no matter whether it is a big or a small organisation.