Status as on- 24/02/2022
Introduction
“Articles of association of a company originally created, or as revised from time to time in pursuance of any former company laws or of the present,” according to the Companies Act of 2013. The Articles of Association of a company are the documents that specify the rules, regulations, and bye-laws governing the company’s internal management, as well as the conduct of its business, and are a vital document in the company’s life.
In a partnership, the articles of association are similar to the partnership deed. They cover topics including making calls, forfeiting shares, director qualifications, the procedure for transferring and transmitting shares and debentures, as well as the rights, duties, and appointment of auditors.
Meaning of Articles of Association
The articles of association are a legal document that lays out the rules for a company’s activities and defines its mission. The paper outlines down how activities will be completed inside the business, including how directors will be appointed and how financial records will be handled.
The articles of association describe how the business is managed, regulated, and owned. The articles can limit the company’s powers, which might be important if shareholders seek assurance that the board of directors will not take specific actions without shareholder permission. The Companies Act of 2006, on the other hand, grants a business an infinite right by default.
The articles of association must include provisions regarding the following:
- Company Name- A company must adopt an official name as a legal entity. It must be present in the articles of association. Usually, the following suffixes “Inc” or “Ltd” are used to show that an entity is a company.
- Purpose of the Company- A company is formed for a specific reason. It is primarily a profit motive to pursue a specific objective by adding value to society. In the articles of association, the rationale or objective of the organisation must be expressed clearly.
- Share Capital- The way in which and when notice to the annual general meeting of shareholders must be delivered may be specified in the articles of organisation. The notice can be presented in a variety of ways, including a newspaper announcement or a written notice delivered to the people listed in the share and shareholder registries. The notice must be issued in private limited liability companies no later than one week prior to the date of the general meeting, or the special date of registration stated in the articles of association, and no earlier than two months prior to the date of the general meeting or the registration date, unless otherwise specified in the articles of association.
- Organisation of the Company- The document includes legal information about the company, including the registration address, the number of directors and employees, and the identity of the founders and original shareholders.
- Shareholders Meeting- The first general shareholder meeting provisions are listed in the shareholder meetings section. Notices, resolutions, and votes are detailed as well in the section, governing subsequent annual shareholder meetings.
Conclusion-
It is a well-established principle of company law that a company’s articles of association cannot override the provisions of the Companies Act, 2013. Furthermore, because the articles are subject to the charter, which is the company’s memorandum, as well as any other company law in effect at the time, the articles of association of a particular business are also obligated to follow the company’s memorandum of association. As a result, it is critical that when a company is formed and its articles of association are established, they are done in accordance with the memorandum of association, the Companies Act of 2013, and any other company law that is in effect at the time.
Disclaimer- The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in
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