The Memorandum of Association (MoA) and Articles of Association (AoA) are the two core constitutional documents of a company: the MoA defines the company’s external scope and objects, while the AoA governs internal rules and management; put simply, the MoA is the company’s charter and the AoA is its rulebook.
Definitions
- Memorandum of Association (MoA): The charter stating the name, registered office, objects, liability, and capital structure that set the outer limits of corporate powers; acts beyond it are ultra vires and void.
- Articles of Association (AoA): The internal regulations covering governance, share rights, meetings, director powers, and procedures; articles implement how the company operates within the MoA’s scope.
Legal effect
- Binding force: The MoA and AoA bind the company and its members; the MoA binds the company’s capacity toward outsiders, while the AoA primarily binds internal relations among members and with the company.
- Hierarchy: The Companies Act prevails over both; the MoA prevails over the AoA where inconsistent; articles cannot override the memorandum or statute.
- Ultra vires doctrine: Acts beyond the MoA’s objects are ultra vires and void, protecting shareholders and creditors by limiting corporate capacity; deviations from AoA can often be regularized by member approval if consistent with MoA and law.
Contents at a glance
- MoA core clauses: Name, registered office, objects, liability, capital; these clauses define identity, domicile, scope, risk allocation, and authorized equity contours.
- AoA typical provisions: Share classes and rights, transfer/transmission, meeting procedures, director appointment/powers, dividends, reserves, and winding-up mechanics.
Alteration
- MoA changes: Generally require a special resolution; object changes require additional statutory steps and filings, given the external impact of corporate capacity.
- AoA changes: Usually by special resolution, provided they do not conflict with the MoA or the Companies Act; flexibility supports evolving governance needs.
Distinction
- Scope vs rules: The MoA fixes the outer boundary of what the company can do; the AoA prescribes how it will be done internally.
- External vs internal focus: The MoA primarily concerns the company’s relationship with outsiders and its capacity; the AoA chiefly addresses member–company and intra-member relations.
- Rigidity vs flexibility: The MoA is comparatively rigid due to the ultra vires constraint and public-facing purpose; the AoA is more adaptable to operational changes via member approvals.
Banking perspective
- Capacity and purpose risk: Credit analysis should confirm that proposed borrowing and business activities fall within MoA objects to avoid ultra vires risk.
- Governance and enforceability: Lender covenants interacting with voting, transfer restrictions, or board powers should be tested against AoA provisions for clean enforceability
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