Every company needs a set of rules and regulations to manage its internal affairs. There are two important business documents of a company, namely, Memorandum of Association (MOA) and Articles of Association (AOA).

ARTICLES OF ASSOCIATION:

The AOA contains the bye-laws of the company. Therefore, the director and other members must perform their functions as regards the management of the company, its accounts, and audits in accordance with the AOA.

According to Section 5 of the Companies Act 2013, the AOA must have the following components:

Inclusion of matters:

The Articles must specify all matters, in accordance with the rules. Furthermore, a company can include additional matters deemed necessary for its management.

Provisions for entrenchment:

The AOA can contain provisions for entrenchment for specific provisions. The provisions for entrenchment can ensure that the specified provisions are altered only if certain conditions or procedures are met or complied with. These conditions are usually more restrictive than those applicable for a special resolution.

Forms of AOA:

Schedule I of the Companies Act, 2013 provides forms for AOA in tables F, G, H, I and J for different types of companies. Further, the articles must be in the respective form.

MEMORANDUM OF ASSOCIATION:

The Memorandum of Association or MOA of a company defines the constitution and the scope of powers of the company. In simple words, the MOA is the foundation on which the company is built. In this article, we will look at the laws and regulations that govern the MOA.

Object of registering a Memorandum of Association or MOA:

• The MOA of a company contains the object for which the company is formed. It identifies the scope of its operations and determines the boundaries it cannot cross.
• It is a public document according to Section 399 of the Companies Act 2013.
• It contains details about the powers and rights of the company.

Under no circumstance can the company depart from the provisions specified in the memorandum. If it does so, then it would be ultra vires the company and void.

Content of MOA:

Name Clause:

1. For a public limited company, the name of the company must have the word ‘Limited’ as the last word
2. For the private limited company, the name of the companymust have the words ‘Private Limited’ as the last words.

Registered Office Clause:

It must specify the State in which the registered office of the company will be situated.

Object Clause:

It must specify the objects for which the company is being incorporated. Further, if a company changes its activities which are not reflected in its name, then it can change its name within six months of changing its activities.

Liability Clause:

It should specify the liability of the members of the company, whether limited or unlimited. Also,

1. For a company limited by shares– it should specify if the liability of its members is limited to any unpaid amount on the shares that they hold.
2. For a company limited by guarantee– it should specify the amount undertaken by each member to contribute to:
   1. The assets of the company when it winds-up. This is provided that he is a member of the company when it winds-up or the winding-up happens within one year of him ceasing to be a member. In the latter case, the debts and liabilities considered would be those contracted before he ceases to be a member.
   2. The costs, charges, and expenses of winding up and the adjustment of the rights of the contributors among themselves.

Capital Clause:

This is valid only for companies having share capital. These companies must specify the amount of Authorized capital divided into shares of fixed amounts.

Association Clause:

The MOA must clearly specify the desire of the subscriber to form a company. This is the last clause.