AMITY GLOBAL

BUSINESS SCHOOL Chandigarh

Articles of association
• The articles of association are the rules and
regulations of a company framed for the purpose
of internal management of it’s affairs.
• It deals with the rights of the members of the
company inter se.
• The articles are framed for carrying out the aims
and objects of M.O.A
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BUSINESS SCHOOL Chandigarh

• The A.O.A of a company are subordinate to and

are controlled by the M.O.A
• The M.O.A contains only the fundamental
conditions upon which alone the company is
allowed to be incorporated.
• The articles should also not authorize the
company to do anything which contravenes the
provisions of the companies act. if they do, they
would be ultra vires the memorandum and will
be null and void.
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BUSINESS SCHOOL Chandigarh

Eg.
• According to section 205 of the companies
act, a company cannot pay the dividend
except out of profits. any provisions in the
articles contrary to this provisions of the
companies act is void.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Model form of articles

• Schedule 1 is divided into tables which serve as
a model for various companies.
• Table A gives a model form of A.O.A. of a co. ltd
by shares
• Table B contains a model form of M.O.A. of a
co. ltd by shares
• Table C gives a model form of M.O.A., A.O.A. of
a co. ltd by guarantee and not having a share
capital.
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BUSINESS SCHOOL Chandigarh

• Table D gives a model form of M.O.A.,

A.O.A. of a co. ltd by guarantee and
having a share capital.
• Table E contains a model form of M.O.A.,
A.O.A. of an unlimited company.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Companies which have their own articles

• A) private companies limited by shares
• B) companies limited by guarantee
• C) unlimited companies
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BUSINESS SCHOOL Chandigarh

• Regulations required in case of an

unlimited company ,a company ltd by
guarantee and a private company
-In case of an unlimited company ,the
articles shall state the number of the
members ,with which the company is to be
registered, and if it has a share capital, the
amount of share capital is to be
registered[u/s 27(1)]
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BUSINESS SCHOOL Chandigarh

• In case of a company limited by guarantee ,the

articles shall state the number of members with
which the company is to be registered.[u/s27(2)]
• In case of private co. the article must contain
provisions which
-restricts the right to transfer its shares
-Limit the number of it’s members to 50
-Prohibits any invitation or a acceptance of
deposits from persons other than it’s members
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Effect of memorandum and articles

-members bound to company
-Company bound to members
-Member bound to member
• Company cannot bind any outsider even though
the name of the outsiders is mentioned in the
articles,
• The directors are bound by whatever is
contained in the articles as they derive their
powers from the articles and are subjected to
limitations.