Define and explain Articles of Association and Memorandum of Association. Discuss their role in defining the relationshi

2.Define and explain Articles of Association and Memorandum of Association. Discuss their role in defining the relationship between the company and its members.

Memorandum of Association (MoA)

The Memorandum of Association is defined under Section 2(56) as "the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act." It is the charter or constitution of the company — the fundamental document that defines the company's relationship with the outside world and the scope of its activities.

Contents of MoA (Section 4(1))

Six Clauses of the Memorandum
Clause	Content
1. Name Clause	Name of the company with "Limited" (public) or "Private Limited" (private) suffix
2. Registered Office Clause	State in India in which the registered office is situate
3. Objects Clause	Objects for which the company is proposed to be incorporated — defines the scope of activities
4. Liability Clause	Nature of liability of members (limited by shares, limited by guarantee, or unlimited)
5. Capital Clause	Authorized share capital, divided into shares of fixed amounts
6. Association / Subscription Clause	Declaration by subscribers that they desire to form a company and agree to take shares

Alteration of MoA

Name (Section 13(2)): Special resolution + Central Government approval.
Registered Office (Section 13(4)/(5)): Within same state — special resolution; between states — NCLT confirmation.
Objects (Section 13(1)): Special resolution + filing with RoC.
Liability (Section 13(1)): Special resolution.
Capital (Section 61): Ordinary resolution (increase); special resolution (reduction, Section 66, requires NCLT).

Articles of Association (AoA)

The Articles of Association are defined under Section 2(5) as "the articles of association of a company as originally framed or as altered from time to time." They contain the internal rules, regulations, and bye-laws governing the management and internal organisation of the company. Table F of Schedule I provides model articles for companies limited by shares.

Contents of AoA (Section 5(2))

Powers, duties, and remuneration of directors.
Voting rights of shareholders and conduct of general meetings.
Transfer and transmission of shares.
Payment and declaration of dividends.
Procedure for calls on shares and forfeiture.
Borrowing powers and creation of charges.
Winding up provisions.

Alteration of AoA

Under Section 14, a company may alter its AoA at any time by passing a special resolution, subject to the conditions in the MoA and the Companies Act.

Relationship between MoA and AoA

The AoA must not exceed or contradict the MoA; in case of conflict, MoA prevails.
Both are public documents accessible to anyone; third parties are deemed to have notice of their contents.

Role in Defining Company–Member Relationship

1. MoA — Company and the Outside World: The MoA limits the capacity of the company. Members know at the time of joining what business the company can conduct. Acts beyond the objects clause are ultra vires and void (Ashbury Railway Carriage v. Riche, 1875), protecting both shareholders and creditors.

2. AoA — Company and its Members: Under Section 10(1), the articles, when registered, bind the company and the members to the same extent as if they had been signed and sealed by each member, and contained a covenant by each member to observe all the provisions of the articles. This creates a statutory contract between the company and its members.

Hickman v. Kent or Romney Marsh Sheepbreeders' Association (1915) — The court held that the articles constitute a contract between the company and its members in their capacity as members, not in any other capacity. A member could enforce articles against the company only for rights given to him as a member.

3. Doctrine of Constructive Notice: Since both the MoA and AoA are registered public documents, every person dealing with the company is deemed to have constructive notice of their contents.

Kotla Venkataswamy v. Rammurthy (1934) — A mortgage deed executed in favour of a creditor was held not binding on the company because the creditor had constructive notice of the AoA which required signatures of specified officers; the deed lacked the required signatures.

4. Doctrine of Indoor Management (Turquand Rule): While outsiders have constructive notice of the contents of public documents, they are not required to ensure that the internal management procedures have been complied with.

Royal British Bank v. Turquand (1856) — A company's directors issued a bond to the bank. The AoA required a general resolution authorising borrowing. The court held the bank was entitled to assume such a resolution had been passed — it need not inquire into internal management. The company was bound.

Conclusion

The MoA defines the company's capacity and external boundaries, while the AoA governs internal governance and the relationship among members and between the company and its members. Together, they form the foundational legal framework of the company — the MoA as the company's charter and the AoA as its bye-laws. The interplay between constructive notice and indoor management ensures that third parties can rely on the company's public documents without being burdened by the company's internal workings.