Difference between Memorandum of Association And Articles of association
Having outer outlook these both types of rules look.similar to each other because both are related to the details of company’s functions and design of the rights of the concerned parties, even then to understand both alike would be a mistake, there is material difference be both of these which we can explain as under –
(1) The memorandum is most important basic document of the company, whereas the article is a subordinate document of the memorandum, because there is description of the objects in the memorandum, whereas in the articles there is description of working-procedure adopted to obtain those objects. Thus the article is a subordinate document of the memorandum.
(2) Association memorandum determines the limit of area of operation of the company whereas the article directs requisite legal procedures for fulfillment of those objects.
(3) Memorandum contracts the outside management of the company whereas the Article controls the internal management of the company.
(4) The Articles can be changed by the special resolution only of the company whereas alteration in the memorandum leaving some particular exceptions can be made by only the permission of court.
(5) Company cannot do such works which are not included in the memorandum but the works, which are not mentioned in the articles can also be done after requisite alterations.
(6) Memorandum is a type of indenture between the company and other parties, which is necessarily must be known to the other parties, but the outsider parties neither have any concern with the Articles and nor those are bound thereto.
(7) If an outsider makes any such indenture with the company which is not permitted by the memorandum then that indenture cannot be made applicable by the court and such works which are beyond the power of board of directors or memorandum, but if these are within the area of operation of the memorandum, then such works are not illegal. Alteration in the rules in this regard in the memorandum only can be made by the members by special resolution.
(8) Mostly the memorandum is unalterable but the article is basically alterable document, alterations oftenly occur therein.
(9) The outsiders have constructive knowledge of the memorandum and the articles. The outsiders can accept this according to the doctrine of indoor management that the article might have been complied with definitely. But is respect of the memorandum, the question of applicability of the doctrine of indoor management does not arise.