Study Guides/Commerce/Difference Between MOA and AOA
Study Guide · Commerce

Difference Between MOA and AOA (Company Law)

When starting a new Private or Public Limited Company, the founders must draft and submit two extremely important legal documents to the government (Registrar of Companies). These are the Memorandum of Association (MOA) and the Articles of Association (AOA). Together, they form the constitution of the business.

Question (Click to Flip)

Can the AOA grant the company a power not mentioned in the MOA?

Answer

No. The MOA is the supreme document. If the AOA tries to give the directors power to do a business that is not written in the MOA's object clause, that AOA rule is legally invalid.

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Key Facts

Every company must have its own unique MOA. However, if a company is lazy, instead of drafting their own AOA, they can simply adopt the standard government template known as 'Table F'.

Any contract signed by the company that goes beyond the powers written in the MOA is completely void and illegal.

1. What is the MOA (Memorandum of Association)?

The MOA is the primary, supreme document of the company. It is the company's external face to the world.

  • Content: It defines the fundamental details: The Name of the company, the State where the head office is located, its Total Capital, and most importantly, its Objects (exactly what business the company is allowed to do).
  • Scope: It defines the boundaries. If an electronics company has an MOA stating it sells TVs, it is legally forbidden from suddenly selling medicines (Ultra Vires act).
  • Relationship: It defines the relationship between the company and the Outsiders (public, banks, and creditors).
  • Alteration: It is extremely difficult to change. Changing the MOA usually requires special permission from the government or a tribunal.

2. What is the AOA (Articles of Association)?

The AOA is the secondary, internal document of the company. It contains the rulebook for how the company will actually be run.

  • Content: It contains rules regarding how meetings will be held, how directors will be appointed or fired, how shares will be issued, and how dividends will be paid.
  • Scope: The AOA is strictly subordinate to the MOA. An AOA rule cannot contradict the MOA.
  • Relationship: It defines the internal relationship between the company and its Members/Shareholders, and among the members themselves.
  • Alteration: It is relatively easy to change. The shareholders can change the internal rules simply by passing a special resolution in a company meeting.

3. Summary Analogy

  • The MOA is like the Constitution of a country (It tells you what the country is and its fundamental limits).
  • The AOA is like the local city laws and police rules (It tells you exactly how the country will be managed on a daily basis).

Questions and Answers

Can the AOA grant the company a power not mentioned in the MOA?+

No. The MOA is the supreme document. If the AOA tries to give the directors power to do a business that is not written in the MOA's object clause, that AOA rule is legally invalid.

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