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Question
Explain the following term/concept.
Articles of Association
Solution
(1) Meaning: The Articles of Association is the second important document of the company. This document is subordinate (Secondary) to Memorandum of Association which contains the by-Laws, the rules and regulations relating to the internal management of the company. It sets out the rights, duties and powers of the Board of Directors, officers and members of the company.
(2) Contents: Articles of Association contains rules and regulations of issue of share, calls on shares, forfeiture of shares, procedure for transfer and transmission of shares and debentures, etc. It also lays down the powers, duties and rights of the governing body of the company.
(3) Other information: Articles of Association establishes the relationship between company and members and between the members. Companies Act has shown the format in the form of Model Articles of Association, tables F, G, H, I and J for preparing the Articles of Association for different types of companies.
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