28 May 2009
The Memorandum of Association is a dominant instrument as compared to the Articles of Association. A Memorandum of Association defines the specific objects and other incidental objects to be carried out by the company on its incorporation and also restricts the company’s power to carry on business within the confines of objects specified in the Memorandum.
The Memorandum of Association consists the name of the company, the place where the registered office of the company shall be situated, the main objects to be followed by the company on its incorporation along with other incidental objects to be carried on by the company for the attainment of the main objects, the liability of the members and the authorized share capital of the company with which the company is to be registered.
The Articles of Association is also the second important document to be registered with the Memorandum. The Articles of Association are the set of rules for the management of the affairs of the company providing for the rights of the shareholders, the meetings, the directors of the company, the manager, the chairman of meetings of the Board, the rights and duties of the directors and other matters required for the regulation of the internal affairs of the company.
The provisions of the Articles are to provide for the management of the company and the provisions of the Articles are binding on the company in reference to its members and vice versa. The Articles of Association can be defined to be a contract between the Shareholders inter se. The binding force of the Articles of Association is only with respect to the relationship of the company in its capacity with the shareholders and does not extend to matters outside the company relationship anything contained in the Articles of Association which is inconsistent with the provisions of the Memorandum is invalid.