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Difference between MOA & AOA: Why Both Documents Matter in Company Formation
Starting a business requires careful planning. Beyond selecting a business name and structure, one crucial step is preparing incorporation documents. In Singapore, two key documents are important: the Memorandum of Association (MOA) and the Articles of Association (AOA). Since the Companies Amendment Act of 2014, MOA and AOA have been consolidated into a single document called the Company Constitution. This means businesses registered after 2014 are no longer required to submit separate MOA and AOA documents to the Accounting and Corporate Regulatory Authority (ACRA). However, these documents remain essential as they form the foundation of a company before it is incorporated. If you’re a foreign entrepreneur planning to establish a business in Singapore, understanding the purposes and key components of MOA and AOA will help streamline the process. But don’t worry if you’re new to this—we’ve got you covered. In this article, we’ll outline the difference between MOA and AOA, their full forms, and why they matter for your business.What is a Memorandum of Association (MOA)?
You may wonder what is a Memorandum of Association? A Memorandum of Association (MOA) is a public legal document that defines the company’s corporate structure, objectives, powers, and limitations. It also establishes the framework for the company’s relationship with its shareholders.MOA Full Form and Key Components
The MOA full form stands for Memorandum of Association. This legal document contains key information about your company. The purpose of MOA is to guide your company in a specified direction, ensuring it operates within the specified boundaries of its objectives. It is typically created during the company’s formation and registration process. The contents of MOA will usually include the following information:- Name clause – it indicates the name of the company.
- Registered office clause – it specifies the company’s registered office address.
- Liability clause – it states whether the liability of the members is limited or unlimited. Limited companies can be further categorised as Companies Limited by Shares or by Guarantee.
- Object clause – it outlines the company’s purpose and activities.
- Capital clause – it contains the company’s share capital and how it’s divided.
- Subscription clause – it contains the name and information of your shareholders and their roles.
Importance of MOA
The Memorandum of Association serves as a company’s blueprint, defining its identity, purpose and responsibilities. As a legal cornerstone, it ensures compliance with the Companies Act. If you are a foreign or new entrepreneur planning to incorporate a company in Singapore, you are required to draft an MOA. When drafting an MOA, it should be created in a way that provides you the flexibility and certainty to control the company as it evolves. The business objectives must be explicitly stated in the MOA. If your business has unusual rules and regulations, they must be stated in the MOA to ensure that they comply with the legal and compliance regulations of Singapore. In the same way, every shareholder and investor should be familiar with the MOA of the company to understand the overall scope and objectives. Beyond compliance, a well-drafted MOA can help prevent potential legal conflicts and can correct the balance of power between owners, shareholders, directors and management in the event of disputes. This makes it essential for these documents to be meticulously crafted.What are Articles of Association (AOA)?
Given that the MOA defines the company’s corporate structure and objectives, what about the articles of association? What are Articles of Association? AOA serves as the rulebook for a company’s internal governance, shaping how it operates and manages daily administration. It specifies the rules and regulations for conducting the company’s day-to-day activities. The company’s AOA can also govern everything from the conduct of board and general meetings to appointing directors.AOA Full Form and Key Components
The AOA full form stands for Articles of Association. While the MOA outlines the company’s objectives, structure and legal boundaries, the AOA primarily focuses on internal governance, management, and the roles of company directors and shareholders within the corporate framework. It also outlines the rights, powers and obligations of the parties involved in the company. Companies with limited guarantee and unlimited companies must register articles of association, while it is optional for companies limited by shares. The contents of AOA typically include the following information:- The shareholder’s rights and responsibilities
- The procedures for holding meetings, such as the annual general meeting and voting
- The appointment and removal of directors
- The distribution of profits
- The regulations governing the company’s operations
- Any other rules or regulations that the company wishes to include
Steps to Prepare MOA and AOA for your Company
By now, you might be familiar with the difference between MOA and AOA. Though ACRA eliminates the need to prepare the Memorandum of Association and Articles of Association separately, newly incorporated companies are required to prepare the Company Constitution, which combines MOA and AOA. Here are some steps to prepare the Company Constitution for your company:- Company’s name and registered office address – this includes indicating a company’s name and registered office address.
- Business objectives and operations – this includes outlining the company’s purpose and the internal governance of day-to-day company management.
- Liabilities of the members of the company – this includes defining the members’ liabilities and whether they are limited or not.
- Total amount of share capital and number of issued shares – this includes a statement specifying the number of shares they agree to subscribe to during the company incorporation.
- Rules & regulations on governance – this includes indicating the rules and regulations on governance, such as conducting meetings, transferring shares, and appointment and resignation of directors and company secretaries.
