While running a business in Singapore is incredibly easy, the process of incorporation can be a headache, especially if you’re not adequately conversant with corporate law.
One particularly challenging bit for many individuals is the drafting and submission of the company constitution- or, in other words- the Memorandum and Articles of Association.
Now, with such a technical name, it’s understandable that this whole thing might feel intimidating at first. Then, to make matters worse, it turns out the rule applies to most of Singapore’s corporate structures. That means you might not be able to avoid it in the long run.
Lucky for you though, this article explains not only the basics about Memorandum and Articles of Association, but also their differences, as well as their connection with the company constitution.
Singapore’s Company Constitution vs Memorandum and Articles of Association
By now, you’ve probably noticed that while we often list the company constitution as one of the principal incorporation requirements, other web guides occasionally replace that with “Memorandum and Articles of Association”.
So, what’s the deal between the two?
Well, the truth is, it all depends on the time period in question. Memorandum and Articles of Association, as it turns out, were applicable until 2014, when the Companies (Amendment) Act of that year changed the rules.
Singapore basically stopped requesting applicants to submit their company’s Memorandum and Articles of Association. Instead, the Accounting and Regulatory Authority (ACRA) has since required corporations to merge the two documents into one comprehensive company constitution. So, whichever way you look at it, your company constitution is more or less an integration between your Memorandum and Articles of Association.
Ok, fair enough. But, what does each of these documents entail?
What Is The Memorandum of Association?
The Memorandum of Association, or MoA in short, is a document that details the company’s overall corporate structure, plus the accompanying aims and objectives. You can think of it as a collection of statements that provide information about the company’s profile, strategy, and scope.
Some of the fundamental details that come with it include:
- The company’s name.
- The members’ liability status- whether limited or unlimited.
- The personal details of the members.
- Each member’s respective share capital amount and equity.
- The company’s business objectives.
- A subscriber clause specifying that the company’s subscribers wish to form a company and agree with the division of shares.
What Are The Articles of Association?
The Articles of Association (or AoA in short), on the other hand, documents the company’s internal administrative regulations. It’s basically a rulebook that governs the day-to-day running of the company- from the responsibilities and powers of each member to the board appointment procedure, and the company’s general meetings.
Hence, the Articles of Association are generally more flexible than the Memorandum of Association. Companies are free to choose their internal management policies and structure.
Click here if you want to know more about the articles of association.
Memorandum and Articles of Association: What Are the Differences Between the Two?
- The Memorandum of Association mostly deals with the relationship between the company and external parties, while the Articles of Association addresses the company’s internal relationships between its members.
- The Memorandum of Association outlines the company’s overall powers and objectives, while the Articles of Association highlights the company’s internal regulations.
- The Memorandum of Association has a structure and a set of clauses that should be strictly adhered to, while the Articles of Association is a bit more flexible. Companies can decide the policies and clauses they’d like to include.
- The Articles of Association can be reviewed and amended retrospectively, while the Memorandum of Association does not accommodate retrospective amends.
- In case of any contradiction between the two documents, the Memorandum of Association will always prevail over the Articles of Association.
Now that the basics are clear, you should have a much easier time identifying the elements to include in your company’s constitution. For an explicitly-detailed set of documents, however, you might want to work with proven experts.
And when it comes to that, WealthBridge has just the team of professionals who can help you with not only the company constitution, but also incorporation, as well as compliance filing.