Memorandum and Articles of Association are the legal documents of the company which must be compulsorily formed when a person is incorporating a Company. Memorandum of Association defines the relationship of a company with the outsiders. It also comprises of the names of all the shareholders, the number of shares held by them in the company and the proper address of the registered office of the company.

When an Entrepreneur decides to incorporate his company, there are certain rules and regulations he has to follow. Company Registration legally is considered to be an overwhelming process. It is simply because of the involvement of so many documents and forms. It is considered to be a tedious task also. However, it is very important to register a company legally. It gives your company a legal identity and makes your company all more reliable. While forming a company there are certain documents that are required and one often needs legal advice to form such documents. In this process, a Memorandum and Articles of Association is to be written. But what are memorandum and articles of association and what do they include? These questions are answered in this article.

Memorandum of Association

It is a document that is essential at the time of incorporation of the company and can be referred to in future also. It is considered to be the charter of the company. It is filed along with other documents to the Registrar of Companies.

The Memorandum of Association has the following Clauses:

Name clause: It contains the name of the company

Situation clause: It contains the location of the registered office. If the registered office hasn’t be decided, it is mentioned along with the temporary office details.

Object clause: This clause contains the object and vision of the company for which it is formed.

Capital clause: Capital Clause has the details of the share capital of the company.

Association clause: The subscribers who have subscribed for the shares of the company. It also includes the details about the witness (who was present at the time of the subscribers’ appointment) should also be mentioned.

Liability clause: The nature of Liability of the Company. Whether it is a limited or unlimited liability company.

It can be inferred that all the details are included in the clauses. Also, it should be noted that the object clause includes every area the company will be working in. If after registration the company decides to enter in some specific area of work, the details of the same are to be mentioned in the Memorandum of Association clearly. The change is made by the filing of the form MGT-14. It is a public document for anyone who is associated with the company. Be it the shareholders or the creditors or anyone for that matter.

It is very important that company works according to its Memorandum of Association. All the outlines and working structures of the company is mentioned in the Object clause itself and hence, should be followed carefully.

Article Of Association

It is a document which states the regulations under which a company operates. It defines the way a company will work, in order to achieve its objectives. It includes every process, from the appointment of directors to the financial and marketing plans of the companies. Though marketing plans are not compulsory since they are a subject to change with time (in near future). It can be treated as a rule book of the company. The rules mentioned, therefore, have to strictly follow. They are a public document for anyone associated with the company. However, they affect the employee of the company only, since it is an internal rule book. It is also reported in clauses. All clauses collectively define the working of the company, the procedure to be implemented in detail that is.

Memorandum is the fundamental document while Article of Association is a subsidiary document. The article of Association deals the internal affairs of the company while Memorandum deals both, the internal as well as the external affairs of the company. A sample of both the documents is available at MCA web portal.

The importance of both the documents has been discussed in this article. Both of the documents require legal consultancy. They are very carefully written with high precision since they are the base of the working of a company. We at, LegalRaasta can provide you with legal aid and help you write an effective Memorandum and Articles of Association.