Key Differences Between Memorandum and Articles of Association

Every company incorporated in India carries two rulebooks from the day it is born. One tells the outside world what the company exists to do. The other tells everyone inside the company how it should run its daily affairs. These two documents, the memorandum of association and the articles of association, often get mixed up by students because they sound similar and are usually filed together. But under the Companies Act, 2013, they play very different roles, follow different rules, and even face different processes when a company wants to change them. Understanding this distinction is not just an exam requirement. It shapes how a company protects its creditors, its shareholders, and its own long-term direction.

What the memorandum of association actually does 🔗

The memorandum of association, commonly shortened to MOA, is defined under Section 2(56) of the Companies Act, 2013 as the memorandum as originally framed or as altered from time to time. In practical terms, it is the foundational charter of the company. A well-known description by Lord Cairns, still quoted in Indian company law teaching, calls it the document that defines and confines the powers of a company.

This “defining and confining” role matters because the memorandum sets the outer boundary of what a company can legally do. It states the company’s name, the state where its registered office is located, the objects for which it is formed, the extent of members’ liability, and the capital the company is authorised to raise. A company cannot lawfully undertake an activity that falls outside what its memorandum permits. This is what company law calls the doctrine of ultra vires, and it exists precisely because the memorandum is meant to be a public promise about the company’s scope.

Who the memorandum protects 🔗

Because the memorandum is a public document filed with the Registrar of Companies, anyone dealing with the company, such as a bank extending a loan, a supplier signing a contract, or an investor buying shares, is legally presumed to have read it and to understand the company’s objects and limits. This is why the memorandum is often described as serving the interests of creditors and the public rather than just the people running the company. It gives outsiders a way to check, before they commit money or resources, whether a transaction even falls within the company’s legal powers.

What the articles of association actually do 🔗

If the memorandum draws the boundary, the articles of association draw the map inside it. Defined under Section 2(5) of the Companies Act, 2013, the articles contain the rules and regulations for the internal management and administration of the company. They are the company’s operating manual.

What typically goes into the articles 🔗

The articles usually cover matters such as the rights attached to different classes of shares, procedures for transferring or transmitting shares, how general meetings and board meetings are convened and conducted, the appointment, powers, and removal of directors, borrowing powers of the board, and the process for declaring dividends. Because these are operational details rather than constitutional limits, the articles tend to be far more detailed and far more frequently updated than the memorandum.

Importantly, the articles cannot override the memorandum or the Companies Act itself. If a clause in the articles conflicts with something stated in the memorandum, the memorandum prevails, since the articles are subordinate to it and to the Act. This hierarchy is a recurring theme in company law: the Act sits at the top, the memorandum comes next, and the articles operate within whatever space both of those leave.

Key differences between memorandum and articles 🔗

The table below summarises the core distinctions that examiners and practitioners both care about.

Scope and external versus internal focus 🔗

The clearest conceptual difference is direction. The memorandum looks outward. It tells the world what the company is permitted to do and defines its relationship with people outside the organisation. The articles look inward. They tell the board and the members how decisions get made once the company is already operating within its permitted scope. A useful way to remember this: the memorandum decides what the company can do, while the articles decide how it does it.

Hierarchy under the Companies Act 🔗

Since the memorandum ranks above the articles, any clause in the articles that contradicts the memorandum is invalid to the extent of that contradiction. Both documents, in turn, are subject to the Companies Act, so neither can validly contain a provision that violates statutory requirements.

How alteration works for each document 🔗

This is where the subordinate role of the articles becomes most visible in practice.

Altering the memorandum 🔗

Under Section 13 of the Companies Act, 2013, a company can alter its memorandum by passing a special resolution, but several categories of change need an extra layer of approval. A change in the company’s name generally requires the approval of the Central Government, unless it is simply the addition or removal of the word “Private” following a conversion. Shifting the registered office from one state to another needs approval from the Regional Director or the Tribunal, which examines whether creditors and other stakeholders have consented or are otherwise protected before allowing the change. This layered approval process exists precisely because the memorandum affects outside parties who relied on its original terms when they chose to deal with the company.

Altering the articles 🔗

Altering the articles is comparatively straightforward. Under Section 14 of the Companies Act, 2013, a company may alter its articles by special resolution, subject to the conditions in its memorandum. Some specific alterations, such as those that convert a private company into a public one or vice versa, do require Tribunal involvement, but the default position is that members themselves can update the articles once they secure the required majority. There is no routine need to approach a government authority simply to update, say, the quorum rule for board meetings or the process for transferring shares.

This gap in procedure reflects exactly why the outline describes the articles as playing a subordinate role. The memorandum represents commitments made to the outside world at incorporation, so changing it invites external scrutiny. The articles represent choices about internal governance, which members are largely free to revise among themselves as the company’s needs evolve.

Why this distinction matters beyond the exam hall 🔗

For anyone studying company law, this distinction is not just definitional trivia. It explains real consequences. A director who commits the company to a transaction outside the objects stated in the memorandum risks that transaction being treated as ultra vires and unenforceable. A board that ignores a procedure laid down in the articles, on the other hand, has usually committed an internal irregularity that members can often ratify or challenge internally, without the transaction itself necessarily being void from the start. Recognising which document governs a given situation, external legitimacy or internal procedure, is often the first step in resolving a company law problem correctly.

What do you think? If a start-up’s articles allow its board to borrow freely but its memorandum’s objects clause is narrowly worded, which document do you think creates the bigger practical risk for the company’s future plans, and why might founders be tempted to keep the objects clause broad from the very beginning?

References

1. https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf
2. https://drishtijudiciary.com/to-the-point/ttp-company-law/key-differences-memorandum-of-association-vs-articles-of-association
3. https://cleartax.in/s/company-moa-aoa-under-companies-act
4. https://blog.ipleaders.in/section-13-of-companies-act-2013/
5. https://corporatelawreporter.com/companies_act/section-13-of-companies-act-2013-alteration-of-memorandum/
6. https://ca2013.com/alteration-of-articles/