Articles of Association
Articles of Association are an important document of a Joint Stock Company. It contains the rules and regulations of the company. The rules are related to the management of the company or the internal working. It plays immensely significant role in the affairs of a company. It deals with the rights of the members of the company between themselves. The contents of articles of association must be such that they do not contradict with the Companies Act and the Memorandum of Association (MoA). The private concerns that are limited by shares or limited by guarantee and all other companies must have their articles of association. Model articles given in Table A of Schedule I of Companies Act, 1956 provides public companies to have their articles if they want to adopt. A public company which has only some articles of its own, articles of Table A will be applicable for the rest. Articles that are profound to be registered should be printed, segmented well and sequenced consecutively.
Contents of Articles of Association:
- Classes of shares, their values and the rights attached to each of them.
- Calls on shares, transfer of shares, forfeiture, conversion of shares and alteration of capital.
- Directors, their appointment, powers, duties etc.
- Meetings and minutes, notices etc.
- Accounts and Audit
- Appointment of and remuneration to Auditors.
- Voting, poll, proxy etc.
- Dividends and Reserves
- Procedure for winding up.
- Borrowing powers of Board of Directors and managers etc.
- Minimum subscription.
- Rules regarding use and custody of common seal.
- Rules and regulations regarding conversion of fully paid shares into stock.
- Lien on shares
Alteration of Articles of Association
The can be alteration of the Articles but that should not permit anything illegal. They should be for the betterment of the company. They should not lead to rapture of contract with any parties.
The following are the regulations regarding alteration of articles:
1. The proposed alteration should not contravene the provisions of the Companies Act.
2. The proposed alteration should not contravene the provisions of the Memorandum of Association.
3. The alteration should not propose anything that is illegal.
4. The alteration should be bona fide for the benefit of the company.
5. The proposed alteration should in no way increase the liability of existing members.
6. Alteration can be made only by a special resolution.
7. Alteration can be done with retrospective effect.
8. The Court does not have any power to order alteration of the Articles of Association.
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