Article of association
Author: Poorvi Sirothia, NMIMS- Mumbai
The article of association is a document that defines the purpose of a company and specifies the regulations for its operations. The documents contain the outline of how the task should be accomplished within an organization. It is also considered as the “constitution of the company”. It outlines the rules and regulations that stipulate company internal affairs.
Generally, AOA includes a company’s legal name, address, purpose, and equity capital, organization of the company, financial provisions and provisions regarding the shareholder’s meetings.
Contents of article of association
- Classes of shares, their values and the rights attached to each of them.
- Call on shares, transfer of shares, forfeiture, and conversion of shares.
- Director’s appointment their power and their duties etc.
- Meetings and minutes, notices etc
- Audit and accounts
- Appointment of auditors
- Voting rights
- Dividends and reserves
- Winding u procedure
- Power of board of directors and managers
- Lien on shares
Alteration of article of association
By special resolution can alter its AOA. A copy of every special resolution altering the articles must be filed with the registrar within 30 days of its passing.
Components of article of association
According to section 5 of the companies act, 2013, the AOA must have the following components –
The AOA mainly contains some specific ways in which a company issues stock, distributes dividends, and perform financial records.
- Provision on the company name
- Purpose of the company
- Share capital
- Organisation of the Company
- Provisions on shareholding meetings
Company name – a company must adopt an official name as a legal entity usually, the suffixes “Inc or “LTD” are used to show that an entity is a company. The words “government” cannot be used as a name because it might confuse the public. Also, offensive and vulgar words are prohibited.
Purpose of the company – the reason or purpose of the organization must be clearly stated in the AOA some jurisdiction allows for very broad purpose statements such as “management” while others require a more detailed purpose of an enterprise.
Share capital – AOA will state the number of types of shares comprising a company’s capital.
Shareholder meetings – first general shareholders meeting provisions are listed in the shareholder meeting section.
Companies are required to file article of association
- Limited companies
- Companies limited by guarantee
- Private companies limited by shares
Forms of Article of Association
Schedule I of the company act, 2013 provides forms for AOA. In table F, G, H, I and J for different types of companies.