What are Memorandum of Association & Articles of Association?

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The Companies Act requires all companies formed in India to submit documents that declare the capital structure of the business, the business it is into and how it is run, owned and governed. These details are contained in the Memorandum of Association (MoA) and Articles of Association (AoA). Think of them as your company’s constitution. The format is standard for these documents, but you need to have them witnessed by a lawyer. Let’s find out what exactly they are for and how you can have them altered as you grow your business:

Memorandum of Association (MoA)

Contents: The main purpose of the MoA is to confirm that the shareholders wish to form a company under the Companies Act, 2013. Every subscriber must receive at least one share and the document must state the name of the company, the registered office address, the main aims and objectives of the business, capital structure and information about the shareholders, along with their liability.

Changes: Any alteration to these clauses need to be communicated to the Registrar of Companies (RoC). A change in the name requires written approval of the government if substantial. A change in the address requires a special resolution to be passed if within the same state; if it falls under the jurisdiction of a different RoC, then also a confirmation from the government (which then needs to be filed with the RoC within 30 days). The objects can be altered by the passing of a special resolution of the board. All other changes need to be communicated in writing to the RoC.

Articles of Association (AoA)

Contents: The AoA defines the duties and powers of the Board of Directors, individuals roles and responsibilities of the directors and how the business is to be carried on. Other important contents are the classes of shares, procedure for issue and transfer of share certificates, voting rights of members and their borrowing power.

Changes: Any changes to the AoA can be made by special resolution and must be communicated to the RoC within 30 days and registered within three months. Of course, only changes authorised by the Act can be made and these must be for the good of the company as a whole.

The MoA is the charter for the company, defining the bigger picture, while the AoA defines internal regulations. Therefore, the MoA requires governmental authorisations while the AoA can be changed by special resolution.

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Vakilsearch's resident expert on starting up, compliance and accounting, he holds a Masters in Accounting and an LLB.

1 COMMENT

  1. Hey Suraj,

    Great tips on articles of association. I have just started learning about all these legal terms and your site is very helpful.

    Thanks,
    Dennis

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