Q.4:- 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. |