11th Class Business Studies Formation Of A Company

  • question_answer 29) Distinguish between 'Memorandum of Association' and 'Articles of Association.'

    Answer:

    Difference between Memorandum of Association and Article of Association  

    Basis Memorandum of Association Articles of Association
    Objective Memorandum of association defines the objects for which the company is formed. Articles of association are rules of internal management of the company. They indicate how the objectives of the company are to be achieved.
    Position This is the main document of the company and is subordinate to the companies Act. This is a subsidiary document and is subordinate to both the memorandum of association and the companies act.
     
    Basic Memorandum of Association Articles of Association
    Relationship Memorandum of association defines the relationship of the company with outsiders. Articles define the relationship of the members and the company.
    Validity Acts beyond the memorandum of association are invalid and cannot be ratified even by unanimous vote of the members. Acts which are beyond articles can be ratified by the members, provided they do not violate the memorandum.
    Necessity Every company has to file a memorandum of association. It is not compulsory for a public limited company to file articles of association. It may adopt table A of the Companies Act.
    Alteration Alteration of memorandum of association is quite difficult and in many cases, approval of certain statutory authority is required. Articles can be altered by passing a special resolution by the members.
       

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