Differentiate between a Memorandum of Association and Articles of Association of a registered company and detail the contents of the Articles of Association
ANSWER
| Memorandum of Association | Articles of Association |
| It is one of the constitutive documents in company formation. | It is one of the constitutive document |
| Every company must have a memorandum of association. | Every company must have a set of regulations as its articles. |
| It is the company‟s charter or external constitution. | A company may adopt Table A with or without modifications |
| It regulates the relations between the company and 3rd parties. | It is the internal constitution of the company. |
| It embodies the name of the company, domicil objects capital, liability date particulars of subscribers. | It contains the rules of internal management. |
| It prevails over the articles in the event of a conflict. | It regulates the relations between the company and its members. |
| Some of its clauses are alterable. | It is alterable by special resolution. |
| If a company adopts Table A as its articles, its contents include:
• Calls • Forfeiture of shares • Borrowing • Transfer and transmission of shares. • Convention and conduct of meetings. • Capital • Bonus shares • Dividend • Office of managing director • Office of company secretary • Auditors • Account • Division of powers between the general meeting and the board etc. |
Under the provisions of the Companies Act, a private company is any company whose articles of association:
- Limit the number of members to 50 excluding current and former employees who are members.
- Restrict the right to transfer its shares.
- Prohibit any invitation to the public to subscribe for its shares or debentures.
Other Characteristics include:
- Has at least one director.
- Entitled to commence business from the date of incorporation.
- Not obliged to hold the statutory meeting.
- Not obliged to publish accounts.
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