Question

Answer the following question:

What are the Articles of Association? Explain briefly its content.

Answer 1

Meaning: The Articles of Association is a secondary, subsidiary, and subordinate document which contains the by-laws, rules and regulations for the internal management of a company.
It lays down the rules for carrying out the objects of the company. These rules are meant for the internal management of the company within the area defined by the Memorandum of Association.
According to Section 2 (5) of the Companies Act, 2013, “Articles mean the articles Of the association of a company as originally framed or as altered from time to time in pursuance Of any previous companies law or of this Act”.
According to Lord Justice Bowen. “The articles of association are internal regulations of the company and are for the benefits of members of the company".

Contents :
The Articles of Association lays down the procedure and rules regarding the following matters or issues :
(1) Company’s share capital and its division into the equity shares and preference shares. Rights of shareholders, a variation of these rights.
(2) Rights of each class of shareholders and procedure for changing their rights.
(3) Procedure relating to allotment and calls on Shares.
(4) Rules relating to transfer and transmission of shares.
(5) Lien on shares.
(6) Increase, reduction or alteration of share capital.
(7) Procedure for conversion of shares into stock.
(8) Share warrants.
(9) Conducting General Meetings.
10) Voting rights of members, proxies and polls.
(11) Directors and officers, their qualification Ares, appointment, remuneration, etc.
(12) Conducting Board Meetings and General Meetings.
(13) Appointments, powers, duties, qualifications, remuneration, removal, etc. of Managing Directors, Manager and Secretary.
(14) Audit of accounts, transfer of money to Reserves declaration of dividend, etc.
(15) Borrowing powers of the company and mode of borrowings.
(16) Issue of share certificate and procedure for issue of duplicate share certificate.
(17) Constitution and composition of various committees such as Audit Committee. Remuneration Committee, Corporate Social Responsibility Committee.
(18) Books of Accounts, registers, annual accounts and audit.
(19) Capitalisation of profit.
(20) Investments of the company.
(21) Use of Common Seal of the company.
(22) Notices. Indemnity
(23) winding-up
(24) Arbitration provisions. If any.