Explain the difference between articles of association and memorandum of a company.

Question: Explain the difference between articles of association and memorandum of a company. [BJS 2000]

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Answer

Articles of Association (AOA) and Memorandum of Association (MOA) are two important documents that govern the internal management and external relations of a company. While both documents are important for the proper functioning of a company, they serve different purposes and have different legal implications.

Memorandum of Association (MOA): The MOA is a document that sets out the constitutional documents of a company and defines its relationship with the outside world. It contains the company's name, registered office, main objects and powers of the company, the liability of its members, and the authorized share capital. The MOA is considered the foundation stone of the company. In the case of Ashok Kumar v. CIT, (2003), the court held that the MOA defines the scope of the company's powers and activities and acts as a contract between the company and its members and the outside world.

Articles of Association (AOA): The AOA is a document that sets out the internal management and administration of the company. It contains rules and regulations regarding the management of the company, such as the appointment of directors, the holding of meetings, and the management of finances.

The MOA sets out the scope of the company's powers and activities and acts as a contract between the company and its members and the outside world, while the AOA sets out the internal management and administration of the company, such as the appointment of directors, the holding of meetings, and the management of finances.

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