Contents of the Articles of Association
Being the rulebook of the company, the Articles of Association is a legally binding document that contains all the necessary rules and by-laws on all the matters prescribed by the Companies Act. Section 5 (2) of the Companies Act, 2013 provides the matters which are to be provided under AoA, some of the content as given below:
- The extent to which ‘Table A’ of the Companies Act is applicable
- Decisions which can be taken by the management
- Adoption of preliminary contracts and related clauses
- Different classes of shareholders
- Both rights and duties of shareholders as per their classes
- Appointment of Directors
- The rights and powers of Directors
- Borrowing powers of Directors
- The procedure of issuing share certificates and share warrants
- Voting of the Directors and Chairman
- Dividend policy of the company
- Process of creation of reserves
- Confidentiality of the trade secrets and trade know-how of the company
- Penalty over the unauthorized disclosure of trade secrets and know-how of the company
- Valuations of the intellectual property of the company
- Process of alteration of share capital
- Issue and transfer of shares
- Transmission clause
- Surrender and forfeiture of shares
- The procedure for special resolutions that can be passed and board meetings
- Arbitration clause in case of disputes
- Entrenchment clause
- Audit and accounts of a company
- Clause of the common seal of the company
- The winding-up procedure of a company
- Forms of the Articles of Association
Articles of Association (AoA) : Meaning, Objectives, Contents and Forms
The provisions of Section 2(20) of the Companies Act, 2013 define a company as a “Company incorporated under this act or any previous company law.” A company is an artificial person that is created by law and has a separate legal entity, perpetual succession, a common seal, and limited liability. As a company is one of the most popular forms of business arrangement among entrepreneurs, it goes through strict and statutory compliance. The compliance of a company is a complex activity that includes many formalities and strict procedures. The formation of a company takes place in stages and every stage involves a set of documents and pre-defined procedures. Among all the other documents, the Articles of Association and the Memorandum of Association are the most important documents for an organization.
Geeky Takeaways:
- A company is a separate legal entity that is formed by a group of individuals to engage in and operate a business organization in a commercial or industrial capacity.
- The Articles of Association and Memorandum of Association are the most important documents for an organization.
- The Articles of Association is also known as the user manual of the company. The AoA states its purpose and strategies for the fulfillment of its objectives, either long-term or short-term.
- AoA defines rules and regulations governing the internal management of the organization for the accomplishment of its goals.
- AoA is a subordinate document as compared to MoA.
Table of Content
- What is Articles of Association (AoA)?
- Objectives of the Articles of Association
- Contents of the Articles of Association
- Forms of Articles of Association
- Conclusion
- Frequently Asked Questions (FAQs)