Difference Between MOA and AOA Explained Simply

Every company registered under the Companies Act must have two essential legal documents – the Memorandum of Association (MOA) and the Articles of Association (AOA). These documents form the constitution of the company and guide how it functions.

Understanding the Difference Between MOA and AOA is crucial for entrepreneurs, professionals, and stakeholders because while the MOA sets the scope of activities, the AOA deals with internal governance.

Table of Contents

What is MOA (Memorandum of Association)?

The MOA is the charter of the company, establishing its identity and purpose. It defines the objectives and limits within which the company can operate.

Key Features of MOA:

Defines objectives: What the company is formed to do.
Binding on company and outsiders: Investors, creditors, and regulators can rely on it.
Mandatory for incorporation: Without MOA, a company cannot be registered.

What is AOA (Articles of Association)?

The AOA is the rulebook of the company. It lays down the internal management framework and operational rules.

Key Features of AOA:

Regulates rights and duties of members.
Specifies how directors are appointed and what their powers are.
Covers meetings, share transfers, dividends, and borrowings.
Provides flexibility as it can be altered more easily than MOA.

Structure of MOA under Companies Act, 2013

The MOA contains six main clauses:

Name Clause-Legal name of the company.
Registered Office Clause– State in which the company is registered.
Object Clause– Main and ancillary objectives.
Liability Clause– Limited or unlimited liability of members.
Capital Clause-Share capital and division.
Subscription Clause– Initial subscribers and their shareholding.

Structure of AOA under Companies Act, 2013

The AOA usually includes provisions on:

Calls on shares and transfer of shares.
Appointment, powers, and duties of directors.
Conduct of Board meetings and General meetings.
Dividend policy and accounts.
Borrowing powers and winding-up procedures.

Difference Between MOA and AOA – Detailed Comparison

Here is a tabular view to make the Difference Between MOA and AOA clear:

Basis	MOA (Memorandum of Association)	AOA (Articles of Association)
Meaning	Defines objectives and scope of the company.	Governs internal management and operations.
Nature	Charter document of the company.	Rulebook of the company.
Relationship	Company & outsiders.	Members & company.
Contents	Name, Office, Objects, Liability, Capital, Subscription.	Shares, Directors, Meetings, Dividends, Borrowings.
Alteration	Needs approval of Govt/Tribunal in certain cases.	Altered by special resolution of shareholders.
Legal Effect	Activities beyond MOA are void (ultra vires).	AOA provisions are binding internally.
Hierarchy	Supreme over AOA.	Subordinate to MOA.
Filing	Mandatory for incorporation.	May adopt Table F (for private companies).

Practical Example: MOA vs AOA in Real Life

Suppose a company’s MOA states that it is incorporated to manufacture furniture. If the company starts trading in software, it will be ultra vires the MOA and invalid.
The AOA, on the other hand, would decide how board meetings are conducted, how directors are appointed, and how dividends are distributed.

This example shows the Difference Between MOA and AOA in action – MOA defines what can be done, while AOA defines how it is done.

Importance of MOA and AOA for Businesses

Provide legal foundation for company incorporation.
Help investors and creditors understand the company’s scope.
Ensure smooth governance by laying down rules.
Prevent mismanagement by clarifying rights and responsibilities.

Legal Provisions Governing MOA and AOA

MOA-Section 4 of the Companies Act, 2013.
AOA– Section 5 of the Companies Act, 2013.

Both must be filed with the Registrar of Companies (ROC) at the time of incorporation.

Penalties for Non-Compliance with MOA and AOA

Acts beyond MOA are invalid and unenforceable.
Ignoring AOA provisions can make company decisions void.
Directors may face penalties and liability under the Companies Act, 2013.

FAQs on MOA and AOA

Q1. Why is understanding the Difference Between MOA and AOA important?

Because it helps promoters, directors, and stakeholders know the company’s scope (MOA) and internal rules (AOA), ensuring legal compliance.

Q2. Which is more powerful – MOA or AOA?

MOA has higher authority; AOA cannot override it.

Q3. Can a company exist without MOA?

No, MOA is mandatory for incorporation.

Q4. Can a company adopt model AOA?

Yes, a private company may adopt Table F of Schedule I as its AOA.

Q5. What happens if a company acts beyond its MOA?

Any act outside the scope of MOA is ultra vires (beyond powers) and void in the eyes of law.

Q6. Is the AOA mandatory for all companies?

Yes. All companies must have an AOA, though small private companies often adopt the model AOA given in Table F.

Q7. How is the Difference Between MOA and AOA relevant for investors?

Investors check MOA to know the company’s scope of business and AOA to understand governance rules before investing.

Q8. Who signs MOA and AOA at the time of incorporation?

Both documents must be signed by all subscribers (promoters) in the presence of at least one witness.

Conclusion

The Memorandum of Association (MOA) and the Articles of Association (AOA) are the backbone of any company’s constitution. While the MOA defines the scope and objectives, the AOA governs internal management.

By clearly understanding the Difference Between MOA and AOA, promoters, directors, shareholders, and professionals can ensure smooth governance, compliance, and growth.