Difference Between MOA and AOA (With Table)

MOA and AOA are chartered documents that organizations formulate for different purposes. These map out certain information that is necessary for the initial phase of the company, 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 vs AOA

The difference between MOA and AOA is that MOA stands for ‘Memorandum of Association’ which contains information that is necessary during the formation of a corporate entity as it specifies powers and objectives whereas AOA stands for ‘Articles of Association’ which contains rules and regulations according to which a company must function.

MOA is a chartered document which maps out what the company is essentially made of and what are 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.

Comparison Table Between MOA and AOA

Parameters of ComparisonMOAAOA
Full-FormMOA stands for ‘Memorandum of Association’.AOA stands for ‘Articles of Association’.
MeaningIt is a chartered document that specifies information about a company’s incorporation.It is a chartered document that specifies rules and regulations for the running of a company.
NatureIt shows relations with outside forces.It shows relations in the internal working of the company.
StandingIt is compliant with the Company Act.It is secondary to Memorandum.
AmendmentIt cannot be amended.It can be amended at any time.
ObligationIt is a legal necessity for every company.It is a legal necessity only for private companies.
ContentIt 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 simply 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 clause, capital clause, situation clause, object clause, liability clause and subscription clause.

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 can 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 by which a corporate entity should abide. 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

  1. MOA stands for ‘Memorandum of Association’ whereas AOA stands for ‘Articles of Association’.
  2. MOA specifies information about a company’s incorporation whereas AOA specifies rules and regulations for the running of a company.
  3. MOA shows relations with outside forces whereas AOA  shows relations in the internal working of the company.
  4. MOA is compliant with the Company Act whereas AOA is secondary to Memorandum.
  5. MOA cannot be amended whereas AOA can be amended at any time.
  6. MOA is a legal necessity for every company whereas AOA is a legal necessity only for private companies.
  7. MOA must include six clauses whereas AOA can be drafted as per the company’s choice.

Conclusion

MOA and AOA have major differences between them. The most notable is the function for which they are drafted. MOA is formed so that a company can map out its formation, which is a basis for further work. On the other hand, AOA is formed to define the rules and regulations that a company should abide by.

Moreover, MOA is a chartered document secondary to the Company Act whereas AOA is secondary to the memorandum. While MOA can be drafted only once and not be amended afterwards, AOA can be amended at any time as per the needs of the organization.

References

  1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3902356
  2. https://repository.up.ac.za/bitstream/handle/2263/29475/dissertation.pdf?sequence=1
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