Memorandum of Association vs. Articles of Association: What's the Difference?

Edited by Sawaira Riaz || By Sumera Saeed || Updated on October 8, 2023

The memorandum of association outlines a company's constitution and objectives, while the articles of association detail the rules governing the internal management of the company.

Key Differences

The memorandum of association is a crucial document that signifies the company's constitution and encompasses pivotal details such as the company’s name, purpose, and capital. In contrast, the articles of association stand as a comprehensive set of guidelines and rules that govern the internal management, working, and control of the company. Herein, the memorandum provides an external constitution, while the articles facilitate internal governance.

Oct 08, 2023

In the context of establishing a company, the memorandum of association acts as a key legal document that is required during the incorporation of a company. Differently, the articles of association, while also integral during incorporation, direct the directors and the management concerning the internal running and governance of the company. The memorandum, therefore, guides external relations and the company’s relationship with the outside world, while the articles address the internal management and operations.

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Specifically, the memorandum of association typically encompasses clauses such as the name clause, situation clause, objects clause, and liability clause, each pivotal in defining the company's basic structure and orientation towards external entities. On the other side, the articles of association delineate specifics like meetings, director details, voting rights, and dividend distribution, all instrumental in conducting the company’s internal affairs and executing managerial responsibilities.

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Notably, the memorandum of association necessitates compliance with the requirements and regulations stipulated by corporate legislation, thus adhering to statutory mandates to be legally sound and validated. Conversely, the articles of association while also needing to adhere to legal stipulations, are often subjected to internal adjustments and amendments, allowing a degree of flexibility in aligning them to the changing needs and dynamics of the company.

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Fundamentally, the memorandum of association signifies the scope of activities and defines the relationship between the company and the external environment, delineating its capacities and capabilities. Opposingly, the articles of association maneuver through the internal functional spheres of the company, bridging management with members and maintaining a systematic and legally compliant functionality within the organization, thereby embodying a manual for internal conduct and management.

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Comparison Chart

Primary Purpose

Defines company’s constitution and objectives.

Governs internal management of the company.

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Main Focus

External aspects of the company.

Internal operations of the company.

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Legal Mandate

Mandatory for company incorporation.

May or may not be mandatory, depending on jurisdiction.

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Flexibility and Amendments

Generally rigid and requires compliance with external statutes.

Can often be altered with internal resolutions.

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Typical Contents

Name, objectives, and capital of the company.

Rules regarding meetings, voting, and dividends.

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Memorandum of Association and Articles of Association Definitions

Memorandum of Association

It involves statutory details, such as the company's name, its objectives, and the capital it is authorized to utilize.

The memorandum of association confirmed the company’s registered capital and business purpose.

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Articles of Association

This legal document defines the process for making internal corporate decisions.

The articles of association dictate the quorum needed for valid board meetings.

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Memorandum of Association

The memorandum of association is a legal document foundational to the incorporation of a company.

The memorandum of association was submitted to legally establish the company.

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Articles of Association

The articles of association govern the internal regulations of a company.

The articles of association specified the voting rights of shareholders.

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Memorandum of Association

This document provides a basic framework, detailing a company’s structure and its relationship with stakeholders.

The memorandum of association outlined the capital structure and shareholder rights.

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Articles of Association

The articles of association outline the roles and responsibilities of directors and officers.

According to the articles of association, directors are elected during the annual general meeting.

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Memorandum of Association

The memorandum of association restrictively delineates the boundaries within which a company can operate.

The company could not diversify its operations beyond what was stated in the memorandum of association.

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Articles of Association

The articles of association describe the rights and responsibilities of shareholders.

Shareholders referred to the articles of association for dividend distribution details.

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Memorandum of Association

It defines the scope, objectives, and powers granted to or by the company.

The memorandum of association clarified the company’s primary business activities and objectives.

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Articles of Association

This document provides the framework for managing a company’s internal affairs.

The CEO referred to the articles of association to resolve a management dispute.

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FAQs

Can a company operate outside the scope defined in its memorandum of association?

No, activities must adhere to what is stipulated in the memorandum of association.

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What do the articles of association regulate?

They regulate the internal management and operations of the company.

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Is the memorandum of association a public document?

Yes, it is generally available for public inspection.

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What is the purpose of the memorandum of association?

It defines the company’s structure, objectives, and deals with external affairs.

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Who enforces the memorandum of association?

It is statutorily regulated and can be enforced by regulatory authorities.

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Are the articles of association binding on the company’s members?

Yes, the articles of association are binding on the company and its members.

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Can the articles of association be accessed by the public?

Typically yes, they are accessible to the public and the company’s members.

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Who ensures compliance with the articles of association?

Company members and directors ensure adherence to the articles of association.

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Can the memorandum of association be amended?

Yes, but amendments usually require approval from the regulatory authority and adherence to a prescribed process.

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What is the liability clause in the memorandum of association?

It stipulates the liability extent of the company’s members.

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Is it obligatory to have articles of association?

This may vary by jurisdiction; some require it, while others may not.

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Do the articles of association address shareholder voting?

Yes, they typically detail voting rights and procedures for shareholders.

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What if a company acts contrary to its articles of association?

Internal consequences, and possible legal ramifications, can result from non-compliance.

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How can the articles of association be altered?

Generally, they can be altered by passing a special resolution in a shareholders’ meeting.

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Is it mandatory to have a memorandum of association?

Yes, it is typically a mandatory document for company incorporation.

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Does the memorandum of association mention share capital?

Yes, it often details the type and amount of share capital.

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What does the articles of association say about board meetings?

They usually detail the manner, frequency, and processes involved in board meetings.

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Can the articles of association detail share allotments?

Yes, they can detail the procedure for issuing and allotting shares.

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What is the significance of the object clause in the memorandum of association?

It defines the purpose and permissible scope of activities of the company.

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What happens if a company violates its memorandum of association?

Legal consequences, such as fines or directives to amend practices, may ensue.

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About Author

Written by

Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.

Edited by

Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.