Memorandum of Association and Articles of Association both are very much important documents for Joint Stock Company. In one side Memorandum of Association is a constitution for the company and in another side, an Articles of Association is a document regarding internal operations of the company. For the time being, though there is no huge difference between them, fundamentally there are some differences between them in various fields. These differences are as follow’s:
Memorandum of Association: It is a legal document prepared in the formation and registration process of a limited liability company to define its relationship with shareholders.
- Contents: It is a constitution of the company. It includes the standard, motto, and power of the activity of the company.
- Nature of Explanation: Memorandum of Association includes a general explanation regarding the company objectives.
- Determination of Relation: By using these documents, a company can establish a relationship with the third party outside of the company.
- The necessity of preparation: It is mandatory for all company to prepare Memorandum of Association separately and getting registration.
- Importance: It is a much more important document for the company. A company cannot go beyond the boundary of this document regarding its business.
- Nature of Control: Memorandum of Association is prepared and regulated according to the company act.
- Importance of rules: The rules and regulation which are written in the treated as permanent and perpetual for the company.
- The direction of power: It determines the boundary of the overall power of the company.
Articles of Association: The document that contains all rules and regulations regarding daily activities and internal management of the company is called Articles of Association.
- Contents: It includes the rules and regulations of the company for internal operations.
- Nature of Explanation: Articles of Association include the descriptive explanations of all aspects of the company.
- Determination of Relation: By using these documents, a company can establish the relationship between the internal corporate body of the company.
- The necessity of preparation: An article of Association is not mandatory for all types of organization. Table-A is to be taken for the public limited company instead of Articles of Association.
- Importance: An Article of Association is comparatively less important and it works as an assistant to the Memorandum of Association.
- Nature of Control: It is regulated by both of the Companies Act and the Memorandum of Association.
- Importance of rules: If any conflict is seen between the rules of these two documents, the rules of Memorandum will be effective.
- The direction of power: It determines the power of the internal body of the company.