AOA Full Form: AOA stands for Articles of Association. The company’s Articles of Association (AOA) contain the rules or by-laws and regulations that control or govern how its business is conducted and how its internal affairs are managed. The AOA of a firm is subordinate to and governed by the MOA (Memorandum of Association). Every organisation must have an AOA since it defines internal rights, workings, management, and tasks. The contents of the AOA must be consistent with the MOA and the Companies Act of 2013.
Objectives of AOA
According to Section 5 of the Companies Act of 2013, the Articles of Association:
- The company’s management regulations must be included.
- Include any items that have been mandated by the rules.
They do not exclude a company from inserting additional issues in the AOA or from making any changes deemed appropriate for the smooth operation of the firm’s affairs.
- Adoption of preliminary contracts.
- Share capital, variation of rights, number and value of shares it holds.
- Issue of preference shares.
- Allotment of shares.
- Calls on shares.
- Lien on shares.
- Transfer and transmission of shares.
- Forfeiture of shares.
- Alteration of capital.
- Share certificates.
- Conversion of shares into stock.
- Voting rights and proxies.
Similarities Between AOA and MOA
Let’s look at the commonalities between AOA and MOA. Both the AOA and the
MOA are critical company documents. These documents share the following characteristics:
- Both MOA and AOA, in terms of commonalities, require registration with the ROC (Registrar of Companies) at the time of incorporation.
- These are the primary documents of the company that act as its constitution.
- Both are open documents that can be viewed by anyone, both internally and internationally.
Differences Between AOA and MOA
When it comes to the distinction between an article of association and a memorandum of association, the following points are crucial.
- The first distinction between MOA and AOA is that, whereas the MOA explains the company’s authorities and objectives, the AOA establishes its rules.
- The MOA reports to the Companies Act, and the AOA reports to the memorandum.
- The MOA cannot be amended retroactively, however, the firm can change the AOA retroactively.
- The main distinction between a memorandum of association and an article of association is that the memorandum contains six provisions, whereas the firm can draught an article as needed.
- The MOA is required for all companies, although a public company can utilise Table A instead of an AOA.
- To update an MOA, a special resolution must be passed in an Annual General Meeting after receiving prior approval from the Central Government, but modifications to an AOA can be made simply by passing a Special Resolution (SR) at an Annual General Meeting (AGM).
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