15 Interesting Differences between MOA and AOA of the Company
An entrepreneur is consistently on thrilled mode when he starts a new business. There are plenty of ideas running in his mind once the business gets started. When a company gets set up, it is a legal entity, governed by the Ministry of Corporate Affairs. It becomes paramount for an entrepreneur to know the dos & don’ts of the legal provisions of a company after registration. A company is mainly governed by two principal documents commonly known as ‘Memorandum of Association’ which is also called as company’s charter document and ‘Articles of Association’ which describes the company’s set of rules and regulations. Consequently, drafting of these documents is on one of the most crucial step in any company. Let us know 15 interesting differences between MOA and AOA of the Company. First lets have a detail note on meaning and role of Articles of Association and Memorandum of Association of the Company.
What is MOA?
MOA is an abbreviation for “Memorandum of Association” of the Company. It is the supreme document of the company. No company can be registered without MOA of company. MOA sets out boundaries for companies beyond which a company cannot carry on the business activity. Any activity carried out by the company beyond the activities as drawn out in MOA, then it shall be considered as void. The crux of MOA is to inform the shareholders, creditors and other parties about the various spheres of the company.
What is AOA?
AOA stands for Articles of association of the company. On incorporation, every company needs a set of rules and regulations to manage its internal affairs. AOA is an internal document of the company. It constitutes the internal management of the company and motives to carry out the objectives as mentioned in the memorandum.
1.Definition of the company
Definition clause in AOA should define whether it is a Private Limited Company or Public Limited or any other company.
2.Share Capital details
- Classes of shares and valuation
- Lien on shares
- Call on shares
- Transfer of shares
- Transmission of shares
- Forfeiture of Shares
3.Alteration of share capital
A company may anytime alter its capital to increase the share capital from time to time depending upon the needs of the company simply by passing special resolution or ordinary resolution in the meeting of the company.
4.Capitalization of Profits
The company may anytime on recommendation from the board, capitalize any part of the amount of any of the company’s reserve accounts, or to the credit of the, profit and loss account, or otherwise available for distribution.
5.Buy Back of share
The company may any time buy back its own shares or other specified securities at a pre-determined price.
6. General Meetings
- Proceedings of the Meetings
- Adjournment of meeting
- Voting Rights
- Proxy
7. Board of Directors
- First directors of the company
- Remuneration of the Directors
- Proceedings of the Board
- Page 8 of 11
- Proceedings of the Board
- Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer
8. Seal of the Company
i) The Board shall provide for the safe custody of the seal. (ii) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a committee of the Board authorised by it in that behalf.
9. Dividends and Reserves
The company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board.
10.Accounts
Open for inspection to the members or any other of the company provided at a determined time and conditions.
11. Indemnity
Every officer of the company shall be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal.
12. Winding up
The winding up process can either be followed by the-
- Company itself or
- By law
Basically company can be wound up voluntarily or Compulsory Winding up. The procedures for both are laid down in the Companies Act, 2013
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