There is a big difference between Memorandum of Association and the Articles of Association.
Memorandum of Association and the Articles of Association are some of the important legal documents that are critical in the formation and running of companies.
These important legal documents are drafted by experts at the time of incorporation of the company and they are useful throughout the existence of the company. This paper discuses the difference between these two important commercial law aspects
Whereas the memorandum of association is a legal document that governs the relationships of a company with the outside parties, the articles of association governs the internal relationships of a company. The contents in the memorandum of association include: name clause, registered office clause, objects clause, limitation of liability clause, capital clause, association clause (Cheeseman, 2012).
The memorandum of association is the basic document needed for the formation of a joint stock company, thus, is known as the charter of the company. The significance of this document is that it sets the limits by which the company operates, thus it becomes unlawful for the company to operate beyond its scope. In this regard, it enables the stakeholders and others who deal with the company to ascertain the permitted range of the company to avoid coming in conflict with the law.
On the other hand, the articles of association are a company formation document that specifies the regulations of the company operations. The document helps to define the company’s purpose and lays how the tasks are to be accomplished within the organization such as handling of finances and appointment of various directors and managers. In addition, the article of association defines the roles and responsibilities of the company directors and the means by which the company shareholders exert control over the board of directors.
Cheeseman, H.R. (2012). Business Law 8th Edition. Prentice Hall