Memorandum of Association vs. Articles of Association — What's the Difference?
By Tayyaba Rehman — Published on December 16, 2023
The Memorandum of Association defines a company's constitution and its scope, while the Articles of Association detail its internal governance and operations.
Difference Between Memorandum of Association and Articles of Association
Table of Contents
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Key Differences
The Memorandum of Association and Articles of Association are two foundational documents crucial to the establishment and functioning of a company. The Memorandum of Association outlines the fundamental conditions upon which a company is allowed to operate. It primarily provides the framework and defines the scope, objective, and limitations of the business, ensuring that stakeholders understand the main purpose of the company.
On the other hand, the Articles of Association delve into the company's internal affairs and management. While the Memorandum of Association sets the boundary, the Articles of Association dictate the rules for the company's governance. This includes procedures for meetings, the appointment of directors, and the rights of shareholders, among other details.
Whereas the Memorandum of Association is concerned with the relationship between the company and the external world, the Articles of Association focuses on the internal management of the company. For instance, while the Memorandum of Association may state that the company will engage in the IT business, the Articles of Association will define how the IT company's board will be constituted and how decisions are to be made.
Both documents are pivotal in the lifecycle of a company, and while they serve different purposes, they are interlinked. The Memorandum of Association essentially provides the foundation upon which the company is built, and the Articles of Association guide how the company's internal structures and processes will function.
Comparison Chart
Primary Focus
Company's constitution and scope
Internal governance and operations
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Relation
External (company and outside world)
Internal (company's management and shareholders)
Contents
Objectives, type of business, capital structure
Procedures, board appointments, shareholders' rights
Mandatory
Generally mandatory for registration
Optional in some jurisdictions, but commonly used
Alterability
Alteration is restrictive and might need govt. approval
Easier to alter with shareholder approval
Compare with Definitions
Memorandum of Association
Dictates the objectives and powers of a company.
The Memorandum of Association specified the capital structure of the firm.
Articles of Association
A set of regulations for company operations.
Regular board meetings were scheduled according to the Articles of Association.
Memorandum of Association
Outlines the scope and limitations of a business.
The company can't exceed the bounds set by its Memorandum of Association.
Articles of Association
Rules governing a company's internal management.
The Articles of Association outlined the voting rights of shareholders.
Memorandum of Association
A company's foundational charter.
The Memorandum of Association defined the primary business activity.
Articles of Association
Dictates the company's internal affairs.
Shareholders referred to the Articles of Association for dividend distribution details.
Memorandum of Association
Details the relationship between the company and external parties.
External stakeholders referred to the Memorandum of Association for clarity.
Articles of Association
Details procedures, rights, and responsibilities within a company.
The CEO's appointment was as per the Articles of Association.
Memorandum of Association
Acts as a company's constitutional document.
Before investing, she reviewed the company's Memorandum of Association.
Articles of Association
Outlines relationships between company stakeholders.
The rights of minority shareholders were protected in the Articles of Association.
Common Curiosities
What's the primary role of the Memorandum of Association?
It outlines the company's constitution, objectives, and scope.
Is it mandatory to have a Memorandum of Association?
Typically, yes, for company registration in many jurisdictions.
How do the Articles of Association affect a company's operations?
They provide rules for internal governance and daily operations.
Who can change the Memorandum of Association?
Changes often require government approval and/or shareholder consent.
Can the Articles of Association be altered easily?
Generally, with shareholder approval, they can be amended.
What happens if there's a conflict between the Memorandum and Articles of Association?
The Memorandum of Association usually takes precedence.
Who uses the Articles of Association frequently?
Company management and shareholders, for governance and rights.
Do all companies have an Articles of Association?
While common, it's optional in some places, but many companies adopt it for clarity.
What if a company doesn't follow its Memorandum of Association?
It can face legal consequences and potential challenges from stakeholders.
Which document would I check for dividend distribution rules?
The Articles of Association, as it covers internal operations and rights.
What's more detailed, the Memorandum of Association or the Articles of Association?
The Articles of Association, as it covers internal governance details.
Can a company operate outside its Memorandum of Association's scope?
No, actions outside its scope are typically deemed ultra vires and void.
Are the Articles of Association public documents?
Typically, yes. They are often available for public inspection.
Who ensures compliance with the Articles of Association?
The board of directors and, in some cases, regulatory bodies.
Does the Memorandum of Association cover share capital details?
Yes, it often outlines the company's capital structure.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
