Sunday, May 11, 2014

Memorandum of Association Vs. Articles of Association

The difference between Memorandum of Association & Article of Association is given here:
BASIS OF DISTINCTION
MEMORANDUM OF ASSOCIATION
ARTICLE OF ASSOCIATION
MEANING
It is a charter of a company .It sets the constitution .It defines limits ,powers and objects of the company
It contains rules and regulation for the internal management of the company
OBJECTIVES
It governs relationship with the external world i.e. creditors, sellers, buyers & debtors
It governs internal relationship between the members of the company.
STATUS
It is the primary document. It is the foundation of the company.
It is the secondary document & it is based on the memorandum of association.
COMPULSION
It is a compulsory document for all the companies
It is compulsory for private companies, unlimited companies and companies limited by guarantee.
ALTERATION
It is an unalterable document. Alteration can only be done by the permission of court
It can be stitched according to the management a resolution is to be passed and it is within the limits of Memorandum of Association
Ultra Vires Actions
It lays down the boundaries beyond which a company cannot work. All such acts are illegal and they are called ultra vires acts.
The articles are controlled by the memorandum Within it the shareholders and the directors may make such regulations as they feel fit for internal management.

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