Two documents you approved in a hurry during incorporation govern everything your company may do and how it must decide: the Memorandum of Association (the company's charter with the outside world) and the Articles of Association (its internal rulebook). Years later, they surface at the worst moments — a banker questioning whether lending is within objects, an investor demanding article amendments, a co-founder exploiting a default you never read. Here is what each document does and where founders should customise.
The MOA: five clauses that define existence
- Name clause: the registered name with Private Limited/Limited suffix
- Registered office clause: the state (which fixes your ROC and stamp jurisdictions)
- Objects clause: what the company exists to do — post-2013 as main objects plus ancillary matters; acts outside objects are ultra vires (banks and diligence teams genuinely check)
- Liability clause: members' liability limited to unpaid share value
- Capital clause: authorised capital and its division — the ceiling on issuable shares (raisable later with fees)
Founder note on objects: draft them broad enough for evolution (the trading company that later builds software shouldn't need an EGM to invoice) but honest enough for licences — some registrations check that objects cover the licensed activity. Altering objects later is possible (special resolution + ROC) but is friction you can avoid at drafting.
The AOA: the rules you actually live under
Articles govern the daily mechanics: share issue and transfer (including the private company's transfer restrictions), board composition, powers and meetings; general meetings and voting; dividends; borrowing powers; common seal and execution. Most incorporations adopt Table F — the model articles — wholesale. Table F is sane but generic: it contains none of the protections real shareholder relationships need. The gap between Table F and a negotiated set of articles is precisely where co-founder and investor conflicts play out.
Any shareholders' agreement right you care about — board seats, veto (reserved) matters, pre-emption, tag/drag rights, founder vesting, exit clauses — binds the company reliably only when written into the Articles. An SHA clause absent from the AOA can lose against the articles in Indian law. Every investment round's closing checklist ends with 'amend and file the articles' for exactly this reason.
Customisations founders actually need
- Share transfer machinery: right of first refusal/offer among founders; board's refusal powers used through defined process
- Vesting and leaver provisions where co-founders hold equity for future work
- Quorum and casting-vote design: who can and cannot convene decisions in a 50:50 company (deadlock machinery)
- Reserved matters lists once investors or unequal founders exist
- Entrenchment (Section 5(3)): making specified articles amendable only by stricter thresholds — the constitutional lock for critical protections
- Borrowing and guarantee limits requiring shareholder consent — self-imposed discipline lenders respect
Altering the documents later
Both documents amend by special resolution (75%) with ROC filings: name changes carry approval steps; registered-office state shifts need RD approval and process; objects, capital and articles changes file through MGT-14/relevant forms. Practical discipline: keep a consolidated current version (amendments scattered across resolutions breed 'which version governs' disputes), check every corporate action against the current articles before boards act (acts beyond articles are voidable messes), and after each funding round, verify the filed articles match the signed SHA — the number of companies operating on stale filed articles is remarkable.
How Aidwish helps
Aidwish drafts and audits charter documents — objects that fit licence plans, articles that encode the founders' real bargain (vesting, deadlock, transfer machinery), and the amendment filings at each corporate event — so the constitution matches the company you're actually building.