## Effect of MOA & AOA
Once registered, the MOA and AOA function like a contract binding the company and its members.
### Three Binding Relationships
| Bound Party | Bound To | Status |
|---|---|---|
| Company | Members | Bound |
| Members | Company | Bound |
| Members | Other Members | NOT bound (general rule) |
### Members' Money Owed = Debt
Any money payable by a member to the company under the MOA/AOA is treated as a debt owed by the member to the company — recoverable like a loan.
### Illustrative Case Laws
1. Borland's Trustee v. Steel Bros & Co Ltd (Member to Company)
- AOA: If a member went bankrupt, his shares must be sold at a price set by directors.
- Borland (a member) went bankrupt; his trustee tried to sell the shares at a higher price.
- Held: The trustee was bound by AOA — sale must follow AOA terms.
2. Wood v. Odessa Waterworks Co. (Company to Member)
- AOA: Directors could declare dividend subject to general meeting approval.
- Directors proposed paying dividend through debenture bonds instead of cash.
- Held: Dividend must be paid in cash as per AOA — company is bound.
3. Rayfield v. Hands (Member to Member — exception)
- The AOA required directors (who were also members) to buy shares from a transferring member at fair value.
- Held: Directors were compelled to buy as the AOA imposed that obligation as between members.
### Key Insight: Members Are Not Bound to Each Other — Generally
But Rayfield v. Hands shows that where the AOA expressly creates obligations between members (e.g., share transfer mechanisms), those obligations can be enforced inter se.