MOA and AOA are chartered documents that organizations formulate for different purposes. These map out certain information necessary for the company’s initial phase, as well as when it is up and running.
Drafting them is one of the most important errands. However, it can often be confusing to tell them apart.
- MOA stands for Memorandum of Association, while AOA stands for Articles of Association.
- MOA outlines a company’s fundamental principles and objectives, while AOA details the company’s internal governance structure.
- MOA is a public document filed with the government during company registration, while AOA is a private document that is not required to be filed.
MOA vs AOA
MOA means Memorandum of Association and is a chartered document that includes information on the incorporation of a company and its relationship with outside forces. AOA stands for Articles of Association and is a chartered document that specifies the rules for running a company and its internal relationships.
MOA is a chartered document that maps out what the company is essentially made of and its objectives. Relations with outside forces are also mentioned in this. It is a legal necessity during the initial set-up phase of a corporate entity.
Once made, it cannot be amended. The document is made in compliance with the Company act.
AOA is another chartered document that maps out all the rules and regulations that need to be followed by the company. It defines the internal working of the organization. However, only private companies are legally bound to prepare it.
The document can be amended as per needs. It is made as a secondary to the memorandum.
|Parameters of Comparison||MOA||AOA|
|Full-Form||MOA stands for ‘Memorandum of Association’.||AOA stands for ‘Articles of Association’.|
|Meaning||It is a chartered document that specifies information about a company’s incorporation.||It is a chartered document that specifies rules and regulations for running a company.|
|Nature||It shows relations with outside forces.||It shows relations in the internal working of the company.|
|Standing||It is compliant with the Company Act.||It is secondary to Memorandum.|
|Amendment||It cannot be amended.||It can be amended at any time.|
|Obligation||It is a legal necessity for every company.||It is a legal necessity only for private companies.|
|Content||It must include six clauses.||Clauses can be drafted as per the company’s choice.|
What is MOA?
MOA is an abbreviation for ‘Memorandum of Association, which is an important chartered document in several jurisdictions. Many a time, it is called a memorandum.
The public document specifies the information that is necessary at the time of setting up a company. It is a legal necessity that needs to be followed at the time of registration.
The information in the document includes scope, power, aim, capital and much more. Any person who is associated with the company as an outsider must be aware of these.
It is important to have gone through the sic clauses in this document, which include name, capital, situation, object, liability, and subscription.
In 2009, information regarding restrictions was made to be included in the document. The ones that were formulated earlier were not required to make amendments. Earlier, the object clause in the memorandum of a company restricted its capacity to act.
However, this brought certain limitations in the day-to-day trading carried out. Later, it was made clear that a company could perform any legal trade or business.
Countries including India, Canada, Nepal, Nigeria, the YK, Pakistan, Ireland, Sri Lanka and even Tanzania are under a legal obligation to make a memorandum at the time of registration.
What is AOA?
AOA is an abbreviation for ‘Articles of Association’. It is a chartered document that defines the rules and regulations a corporate entity should abide by.
Every private company in certain jurisdictions must draft this as a secondary document to a memorandum. Unlike MOA, AOA is more about the internal affairs that take place in an organization.
The document involves various aspects that are included as per the choice of the company in question.
Some commonly included topics are issuing of shares, valuation of rights, director’s meetings, the confidentiality of working, dividend policy and even day-to-day trading.
Amendments can be made to an AOA at any time a company needs them. However, it is important to consistently keep up with environments as this document can prove to be very useful.
It can be a reference for disputes and can even be helpful for shareholders to trust the company. Moreover, it can also help in case a shareholder makes unrealistic demands.
Regardless, amendments made must abide by the laws and regulations of the country. Some countries that make it necessary to form this document include India, Pakistan, the United Kingdom, Nigeria, etc.
Documents that are somewhat similar to AOA need to be drafted in countries including Germany, France and Ukraine.
Main Differences Between MOA and AOA
- MOA stands for ‘Memorandum of Association’ whereas AOA stands for ‘Articles of Association’.
- MOA specifies information about a company’s incorporation, whereas AOA specifies rules and regulations for running a company.
- MOA shows relations with outside forces, whereas AOA shows relations with the company’s internal working.
- MOA is compliant with the Company Act, whereas AOA is secondary to Memorandum.
- MOA cannot be amended, whereas AOA can be amended at any time.
- MOA is a legal necessity for every company, whereas AOA is a legal necessity only for private companies.
- MOA must include six clauses, whereas AOA can be drafted as per the company’s choice.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.