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Thread: Q. Write a note on articles of association and memorandum of association of public

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    Word Icon 35px Jpg.ashx Q. Write a note on articles of association and memorandum of association of public

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    Q. Write a note on articles of association and memorandum of association of public limited company drawing a distinction between the two (2003)
    1. Introduction:

    Memorandum of association is a document which sets out the constitution of a company. it defines its relation with outside world and the scope of its activities. where as articles of association are the rules made by the company for internal management of its affairs and for carrying out the objects of the company. memorandum of association and articles of association must be filed in registrar's office for the registration and incorporation of a company.
    2. Articles of association:
    Articles of association is a document in which rules and regulations are written which governors the internal administration of a company. in other words, it is concerned with the procedural matters in the routine conduct of the affairs of the company.
    3. Importance of articles of association:
    It has much importance because the rights of the members of the company among themselves, and the manner in which the business of the company shall be conducted.
    4. Contents of articles of association:
    following are the main contract of article of association.
    1. Amount of capital and its division into various shares.
    2. Rights regarding the different shares holders.
    3. Rules regarding transfer of shares.
    4. Calls on shares.
    5. Appointment of directors.
    6. Powers and duties of director.
    7. Alteration of capital.
    8. The functions and powers of managing agents.
    9. Number, qualification, remuneration and liabilities of directors.
    10. Procedure of disposing of company.
    11. Stamp of company.
    12. Voting right of Share-holder.
    13. Procedure for winding up of company.
    14. Declaration of dividend.
    15. Rules regarding the forfeiture and surrender of shares.
    16. Proceeding of Share holders meeting.
    17. Convening and conduct of meetings with reference to notice, quorum, poll, proxy, resolutions etc.
    18. Procedure for winding up of company.
    5. Memorandum of association:
    Memorandum of association is a basic document of a company. it is also called charter of the company memorandum of association sets the limits outside which the company cannot go.
    (a) Purpose:
    The main purpose of memorandum of association is to enable, shareholders, creditors and all those who concerned with the company to know what is the permitted range of the enterprise.
    6. Contents of memorandum of Association:
    Following are the main contents of memorandum of association.
    1. Name of the company.
    2. Place of registered office.
    3. Objects of the company.
    4. Liability of the shareholders of the company.
    5. Total amount of share capital which is called authorized or registered capital.
    7. Difference between articles of association and memorandum of association:
    I. As to alteration:
    M. O. A is regarded unalterable document in it.
    A O A is regarded alterable document company can change conditions mentioned in it at any time.
    II. As to subordination:
    M. O. A is like a controller of company.
    A. O. A is the subordinate to M. O. A.
    III. As to importance:
    M. O. A has primary importance.
    A. O. A has the secondary importance in the formation of the company.
    IV. As to compulsion:
    M. O. A is a compulsory document for formation of company.
    A. O. A is optional document for formation of company.
    V. As to clauses:
    M. O. A has usually six clauses.
    A. O. A has many clauses. table A of the companies ordinance has 85 clauses.
    VI. As to legal effect:
    Any act beyond the limit of M. O. A is illegal.
    Any act beyond the limit of A. O. A is not illegal.
    VII. As to object:
    M. O. A lays down the objects of the company.
    A. O. A contains the procedure for achieving objects.
    VIII. As to limits business:
    M. O A determines the company business.
    Business limits are not mentioned in A. O. A
    IX. As to nature:
    M. O. A is the charter of the company which defines the internal powers of the company.
    A. O. A contains the rules and regulation for internal management.
    X. As to relation:
    M. O. A defines the relationship between company and out sides.
    A. O. A defines the relationship between management and shareholders.
    XI. As to rights and duties:
    In M.O.A rights and duties of company are ascertained.
    An A.O.A right and duties of members and directors are ascertained.
    XII. As to certificate of commencement:
    M.O.A is essential for getting certificate of commencement.
    A.O.A is not essential for getting certificate of commencement.
    XIII. As to incorporation:
    M.O.A contains the conditions upon which the company is granted incorporation.
    A.O.A gives a final touch to the conditions described in it.
    XIV. As to scope:
    M.O.A. has wider scope.
    A.O.A has lessor scope.
    XV. As to registration:
    M.O.A has to be registered in case of company limited by shares.
    It is not compulsory to register A.O.A.
    XVI As to permission for alteration:
    For alteration of M.O.A prior permission is to be given by federal govt.
    There is no need of permission for alteration in A.O.A
    8. Conclusion:
    To conclude i can say that, the memorandum of association and articles association are important document for the formation of company these documents are basic legal documents of a company.

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