Memorandum of Association and its distinction with Articles of Association

Memorandum of Association (MoA)

The Memorandum of Association (MoA) is the fundamental document of a company, often referred to as its "charter." It defines the company's constitution, its objects, and the scope of its powers. It governs the relationship between the company and the outside world.

Any act done by the company which goes beyond the powers defined in the MoA is considered ultra vires (beyond the powers) and is void.

Essential Contents (Clauses) of MoA

Under Section 4 of the Companies Act, 2013, the MoA must contain the following six clauses:

1. Name Clause: The name of the company. A private company must end with "Private Limited" and a public company with "Limited."

2. Registered Office Clause: The state in which the registered office of the company is situated. This determines the jurisdiction of the Court and the Registrar of Companies (ROC).

3. Object Clause: The most important clause. It defines the purpose for which the company is formed and the activities it is authorized to undertake.

4. Liability Clause: States the nature of the liability of the members (e.g., limited by shares or limited by guarantee).

5. Capital Clause: States the amount of nominal (authorized) capital with which the company is registered and its division into shares of a fixed amount.

6. Subscription Clause: Contains the names, addresses, and signatures of the subscribers who agree to take a certain number of shares in the company.

Distinction: MoA vs. AoA

While the MoA defines the company's boundaries, the Articles of Association (AoA) contain the internal rules and regulations for managing the company's affairs.

Feature	Memorandum of Association (MoA)	Articles of Association (AoA)
Nature	It is the charter or constitution of the company.	It contains the internal rules and bye-laws of the company.
Scope	Defines the relationship between the company and outsiders.	Defines the relationship between the company and its members.
Hierarchy	It is the dominant document; it is subordinate to the Companies Act.	It is subordinate to both the Companies Act and the MoA.
Contents	Lists the fundamental conditions upon which the company is incorporated.	Lists the procedures for internal management (e.g., calls on shares, meetings).
Ultra Vires	Acts beyond the MoA are void and cannot be ratified by shareholders.	Acts beyond the AoA are irregular but can be ratified by shareholders.
Alteration	Requires a special resolution and, in many cases, approval from the Central Government or Tribunal.	Can be altered easily by passing a Special Resolution.

The Doctrine of Ultra Vires

If a company performs an act not mentioned in the Object Clause, it is "Ultra Vires the Company." Even if every single shareholder agrees to the act, it remains legally invalid. This protects investors and creditors by ensuring the company’s funds are used only for the purposes originally disclosed.