It is an official document governing the running of a company that is placed with the Registrar of Companies. The articles of association constitute a contract between the company and its members, set out the voting rights of stockholders and the conduct of stockholders' and directors' meetings, and detail the powers of management of the company. A memorandum of association is a related document.
The Articles of Association contain, as per the law requires, provisions on the company name, address and domicile, the purpose of the company, the amount of share capital and the contributions made thereto, the number, the par value and the type of shares, the calling of a general meeting of ...view middle of the document...
The provisions of the AA must not be in conflict with the provisions of the MA. In case such a conflict arises, the MA will prevail.
Normally, every company has its own AA. However, if a company does not have its own AA, the model AA specified in Schedule I - Table A will apply. A company may adopt any of the model forms of AA, with or without modifications. The articles of association should be in any of the one form specified in the tables B, C, D and E of Schedule 1 to the Companies Act, 1956. Form in Table B is applicable in case of companies limited by the shares, form in Table C is applicable to the companies limited by guarantee and not having share capital, and form in Table D is applicable to company limited by guarantee and having a share capital whereas form in table E is applicable to unlimited companies. However, a private company must have its own AA.
The important items covered by the AA include:-
1. Powers, duties, rights and liabilities of Directors
2. Powers, duties, rights and liabilities of members
3. Rules for Meetings of the Company
5. Borrowing powers of the company
6. Calls on shares
7. Transfer & transmission of shares
8. Forfeiture of shares
9. Voting powers of members.
Some others are:
* the issuing of shares (also called stock), different voting rights attached to different classes of shares
* valuation of intellectual rights, say, the valuations of the IPR of one partner and, in a similar way as how we value real estate of another partner
* the appointments of directors - which shows whether a shareholder dominates or shares equality with all contributors
* directors meetings - the quorum and percentage of vote
* management decisions - whether the board manages or a founder
* transferability of shares - assignment rights of the founders or other members of the company do
* special voting rights of a Chairman, and his/her mode of election
* the dividend policy - a percentage of profits to be declared when there is profit or otherwise
* winding up - the conditions, notice to members
* confidentiality of know-how and the founders' agreement and penalties for disclosure
first right of refusal - purchase rights and counter-bid by a founder.
26. ARTICLES PRESCRIBING REGULATIONS
There may in the case of a public company limited by shares, and there shall in the case of an unlimited company or a
company limited by guarantee or a private company limited by shares, be registered with the memorandum, articles of
association signed by the subscribers of the memorandum, prescribing regulations for the company.
27. REGULATIONS REQUIRED IN CASE OF UNLIMITED COMPANY, COMPANY LIMITED BY GUARANTEE OR
PRIVATE COMPANY LIMITED BY SHARES
(1) In the case of an unlimited company, the articles shall state the number of members with which the company is to
be registered and, if the company has a share...