Difference between memorandum of association and memorandum of understanding
Answers
Let us understand the definitions of MOU and MOA -
MOU (Memorandum of Understanding) -
It is an agreement between two or more parties. It gives details about terms, responsibilities, and requirements about parties in concern. It is not legally binding on any of the parties and doesn’t involve exchange of money, but is considered vital document as per law.
MOA (Memorandum of Association) -
It is the most important document and should be drafted carefully. It is legally binding on the parties. It is to be filed with the Registrar of Companies during the process of incorporation of the company. It contains rights, powers, and privileges of the company. It states the relationship between the company and the outsiders (stakeholders, shareholders, creditors, etc.). The company cannot do any business or activity which is not mentioned in the MOA and cannot execute powers beyond those mentioned in MOA.
Difference between MOU and MOA -
The main difference is in terms of intention of the parties to be legally bounded by the terms of agreement.
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