What is Articles of Association (AoA)?
The Articles of Association (AoA) state the rules and regulations of a company’s internal affairs and dealings with its management. AoA also defines the purpose of a company and borders on the ways in which the company should accomplish its functions. The functions include the preparation of financial statements and the management of financial statements. An AoA is like a user manual for an organization, which contains its purpose and strategies for the fulfillment of its objectives, either long-term or short-term. The main focus of an AoA is to give its stakeholders information regarding the methods used by the organization to accomplish its objectives, either daily, quarterly, monthly, or yearly. AoA consists of the legal name of the company, address of the company, financial provisions of the company, purpose of the formation of the company, provisions related to the shareholders’ meetings, and equity capital of the company. AoA connects the members of a company with the company itself.
Section 2(5) of the Companies Act of 2013 defines Articles of Association (AoA) as “The Articles of Association (AOA) of a company originally framed or altered or applied in pursuance of any previous company law or this act.”
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)