Distinguish between the following: Memorandum of Association and Articles of Association.

Answer 2A(iii) Memorandum of Association and Articles of Association The main points of distinction between memorandum and articles may be noted as follows: The memorandum contains the fundamental conditions upon which alone the company is allowed to be incorporated. These conditions are introduced for the benefit of the creditors, and the outside public, as well as the shareholders. The articles of association are the internal regulations of the company; they only regulate the relationship between company and the shareholders/members and amongst the members themselves. Memorandum lays down the area beyond which the activities of the company cannot go. Articles provide for regulations inside that area. Thus, memorandum lays down the parameters for the articles. Memorandum of association can be altered only under certain circumstances and in the manner provided in the Companies Act, 2013. In most of the cases permission of the Central Government/Tribunal is required, beside the approval of the shareholders in a general body meeting either by way of an ordinary resolution or special resolution. Generally, articles can be altered by the members by passing a special resolution only. Memorandum of Association cannot include any clause contrary to the provisions of the Companies Act. The articles of association are subsidiary both to the Companies Act and the memorandum of association. Acts done by a company beyond the scope of the memorandum are ultra vires and, thus, absolutely void. They cannot be ratified even by unanimous vote by all the shareholders. But the acts beyond the articles can be ratified by the shareholders provided the relevant provisions are not beyond the memorandum.