Articles of Association

Definition
► AOA or simple articles are the rules , regulations and byelaws for the
internal management of the affairs of a company. They are framed with
the object of carrying out the aims and objects as set out in the MOA.
► Sec. 2(2) of the Companies Act “Articles of Association of a company as
originally framed or as altered from time to time in pursuance of any
previous company law or of this Act”
► Lord Cairns observed that “the articles play a part subsidiary to the MOA.
They accept the memorandum as a charter of incorporation, so accepting
it, the articles proceed to define the duties , the rights and powers of
the governing body as between themselves and the company at large and
the mode and form in which the business of the company is to be carried
on and the mode and form in which changes in the internal regulations of
the company may from time to time be made “.
Contents of Articles
► Sec 5 of the Companies Act 2013 , - the articles shall contain the
regulations for the management of the company . The articles shall
also contain such matters as may be prescribed . Articles usually
contain provisions relating to the following:
1. share capital and variation of rights
2. Lien
3. Calls on shares
4. Transfer of shares
5. Transmission of shares
6. Forfeiture of shares
7. Alteration of capital
8. Capitalization of profits
9. Buy-back of shares
10.General meetings
Contd…..
11.Proceedings at general meetings
12.Adjournment of meetings
13.Voting rights
14.Proxy
15.Board of Directors
16.Proceedings of the Board
17.Chief Executive officer, manager, Company Secretary or chief financial
officer
18.The seal
19.Dividends and reserves
20.Accounts
21.Winding up
22.Secrecy / indemnity clause
Alteration of Articles( Sec.14)
► Companies have been given wide powers to alter their articles
► Procedure for alteration(sec.14)
► A company may by a special resolution alter its articles including alterations
having effect of conversion of-
► 1. Private company into a public company.
► 2. public company into a private company (approval of Tribunal required)
► Alteration of memorandum or Articles to be noted in every copy(Sec15)
► 1. every alteration made in the memorandum or Articles of a company shall
be noted in every copy of the memorandum or articles ,as the case may be .
► 2. if accompany makes any default in complying with the provisions of the
subsection (1) the company and every officer who is in default shall be liable
to a penalty of Rs. 1000 for every copy of memorandum or articles without
alteration.
Limitations to alteration
No
inconsistency
with the
Approval of Act No conflict with
stock exchange memorandum

Alteration may
be with
Nothing illegal
retrospective
effect

Limitations
Alterations
No expulsion of Benefit to
a member company

Breach of Liability of
contract members

Alteration by
Approval of
special
Tribunal
resolution
 Difference Between MOA and AOA
Points MOA AOA
Nature Charter of the Company on the basis of which it Basic rules for internal management of a company
is incorporated which are considered to be subsidiary to the
memorandum
Contents Fundamental conditions upon which the Contains rules and regulations to be followed for the
company is allowed to come into existence internal a management of the company

Agreement This is an agreement between the company and Agreement between the company and the members
outsiders dealing with the company of the company-who form the company and are
owners of the company
Scope Wider scope , acts ultra vires are totally void Less wider scope, acts that are ultra-vires are
and cannot be ratified even by shareholders irregular and can be ratified by shareholders

Alteration Is comparatively difficult Altered easily by passing special resolution

Filing the Compulsory to file with the Registrar of the Not compulsory
document company

Purpose Ensure shareholders money is being used for Is to provide rules and regulations for internal
authorized object and make outsiders transact management
with the company