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What Are Articles of Memorandum?

By Jacinta Sherris

Published on 18 Apr 2023 4 min read

An Articles of Memorandum, also known as a Memorandum of Association (MOA), is a legal document that outlines the objectives, mission, and scope of an organization. Oftentimes, it lays the foundation for the legal status of a company.

In this article, we explain what the requirements for articles of the memorandum are and how to go about drafting an article of memorandum.

Articles of Memorandum Explained

Articles of memorandum, or MOA sets out the fundamental principles of a company. It spells out the company’s powers, and limitations, as well as the rights and liabilities of its shareholders or members. This document is a crucial component of a company’s incorporation process as it creates the legal framework for the company’s operation.

The purpose of articles of memorandum is to give a clear explanation of the company’s goals and the way it intends to achieve them. It sets out the company’s purpose, which guides the directors and members of the company toward the achievement of the objectives. The document specifies the range of activities the company can undertake to accomplish its goals. The articles of memorandum can also impose restrictions and limitations that the company must comply with.

The articles of memorandum also includes the rights and liabilities of shareholders or members. It determines the extent to which members share in the profits of the company and their obligations to contribute to its assets. This document helps in creating an equitable distribution of the company’s assets and liabilities among its members, thus ensuring transparency and fairness. The articles of memorandum serves as a legal contract between the company and its members and is used to settle any disputes related to the company’s operations. 

Is Your Business Required to Have an Article of Memorandum?

Yes, articles of memorandum are required for businesses. They’re needed to establish a business or company since they set out the fundamental principles under which the company operates and name the founding members. 

Articles of Memorandum vs Articles of Association: Differences Explained

The articles of memorandum outlines the company’s reason for existence and its main purpose. This document is crucial to the company’s incorporation since it specifies the scope within which the company can operate. The document also defines the company’s relationship with its shareholders and creditors.

On the other hand, the Articles of Association (AOA) is a legal document that outlines the internal rules and regulations of a company. This document serves as a guide on how the company should be run and how internal disputes should be resolved. The document includes details on the company’s management, voting rights of shareholders, responsibilities of directors, and other internal procedures. The articles of association also specify the type of shares, the powers of the board of directors, and the election of officers.

Both the articles of memorandum and the articles of association are vital documents when forming a company. The memorandum of association establishes the company’s objectives and scope of operations, while the articles of association specifies the rules and regulations for internal operations. Understanding the differences between these two documents is essential to ensure that your company is legally sound and operates smoothly.

How to Prepare Articles of Memorandum

Let’s take a look at the process for preparing articles of memorandum.

Gather All Required Information

To begin the process of preparing articles of memorandum, it is necessary to gather all necessary information that will be included in the document. This includes the organization’s name, objectives, mode of operation, and the company’s share structure, as there will be a limit to how much stakeholders can possess.

Draft the Document

Once all the necessary information has been gathered, the next step is to draft the articles of memorandum. It is essential to ensure that the language is clear and concise, setting out the objectives and goals of the organization in a way that is easy to understand. The document should also incorporate the responsibilities of the organization’s directors, shareholders, and stakeholders. The documentation should be thoroughly scrutinized, so as not to miss out on any necessary details.

You may choose to work with a lawyer or professional with expertise in corporate law at this stage. It’s also required that the document be approved by the company’s members in a general meeting.

Finalize the Articles of Memorandum

After drafting the articles of memorandum, it is essential to scrutinize and revise the document to ensure that it is comprehensive and accurate. It is recommended to seek legal advice to confirm that the document meets the legal requirements for the organization as applicable.

Once approved, the document must be submitted to the relevant government department for registration.

Prepare a Clear Foundation for Your Company 

Preparing an articles of memorandum can be a complex process, but with a clear understanding of its basics and collaboration with a legal professional, it is possible to create a legally sound and effective document that will guide a company or organization toward success.

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