ARTICLES OF ASSOCIATION.

The article of association is the rules and regulations or

the bye laws which govern the internal management of the
company. They are like partnership deed in a partnership .it
is second imp document to be filled with register at the time
of the co.
The true nature of Articles Can be understood by the
observation of Lord Cairns in Asbury rail carriage and iron
co v/s Riche ‘The article proceed to define the powers of
governing body as between themselves and the mode and
form in which the business of co is at large , the mode and
form in which business to carried on and the form in which
changes in which changes in the internal regulations of the
may, form time in which changes in the internal regulations
of the co may, from time to time be made”
Thus Articles of association are subordinate to the
Memoramadum of association of the co.
Contents of articles of association.
A co should usually contain the following matters
1 the exclusion, whole or part of table A,
2 share capital
3 Rights of different classes of shareholders
4 allotments of shares
5 calls on shares
6 lien on shares
7 forfeiture of shares
8 transfer of shares
9. Surrender of shares
10. Share certificate
11. Issue of share warrants
12. Increase or Decrease of shares capital
13. Conversion of shares into stock,
14. Consolidation and sub-division of shares
15. Borowing powers
16. General meeting,
17. Appointment of managerial personnel;
18. Appointment and remuneration of auditors
19. Dividends and reserves
20. Accounts and audit;
21. Adoption or execution of preliminary contracts,
22. Capitalization of profit;
23. Notices;
24. Common seal;
25. Windings up.

SPECIAL PROVISIONS IN ARTICLES

Following types of companies,

I ) . Private limited company with shares,

According to sec 3 (I) (iii) of the companies Act, the
Articles of a private limited company must:
(a) prohibit an invitation to the public to subscribe to its
shares debentures,
(b) restrict the right of its members to transfer shares,
(c) limited member of its members to fifty,
(d) Prohibits any invitation or acceptance of deposits
from persons other than its member, directors or their
relations.
ii) Unlimited company;
According to section 27(1) of the Act , the articles of an
unlimited company must;
(a) state the number of member with which the company
is to be registered;
(b) if such a company has shares capital,

iii) Company limited by guarantee

According section 27(2) of the companies Act, the Articles
of the company limited by guarantee must contain.

ALTERATION OF ARTICLES OF ASSOCIATION.

A company has wide powers to alter it Articles to suit its
requirements from time to time . The procedure for alteration
of articles is contained in section 31 of the companies Act.

Steps of Alteration:
The following alteration;
(1) A decision in the meeting of the Board must be taken
to change all any of the regulations of the existing
articles and they should fix up the day, time, place
and agenda for the general meeting.
(2) It should be seen that the proposed alteration
conformed to provision of the Act and memorandum.
(3) A calling the general meeting should be sent to every
member.
(4) If the shares of the company are enlisted with any
recognized stock exchange,
(5) A special resolution should be passed by shareholder
in the general meeting.
(6) After the articles have been altered.
(7) A copy of the special resolution along with
explanatory statement in form no 23 must filed with
register within thirty days after passing of the
resolution.
(8) Necessary changes must be made in all copies
articles.
(9) If the effect of alteration is to convert a public
company into a private company,
Effect of Altered Articles
Alternation bind the members in the same way as original
articles sec 36
The legal reprehensive of co can challenged the alternation
on ground that a retrospective effect.
Relation between memorandum and articles
Lord cairns in ash bury carriage co v/s riche observed that
‘the article play a part subsidiary to the memorandum of
association’ .
The article cannot give to the co power which are given by
the memorandum of association.
Binding effect of articles sec 36[1]
1 members to the company
2 company to the members
3 member inter se
4 company to outsiders [ a person who is not a member of co
]
Doctrine of indoor management
Memorandum and article of association when registered with
the register of co assume the register of public document

Under sec 610 of the act

Every person dealing with the co to have notice of their
continents and shall be bound by them this role is know as
doctrine of constructive notice .
It is an internal management .
Exception to the doctrine of indoor management
The doctrine of indoor management is subject to the
following limitations
1 knowledge of irregularity
2 negligence on the part of the outsider
3 forgery
4 no knowledge of the articles.
5Acts outside apparent authority
6 void or illegal tractions

Prospectus
A prospectus as per sec 2 [36] read along with sec 58A
means any document described or issued as prospectus and
includes any notice ,circular advertisement circular or other
document from public or inviting offers from public for the
subscription or purchase of any shares in or debentures of
body corporate.
Two things if it satisfied
1 invites deposits
2the adored invitation is made to the public.
Continents of prospects
1 General information

2 Capital structure of the company

A]authorized, issued paid up capital .
B ] size of the present , giving separately reservation for
preferential allotment to promoters and others e

3 terms of the present issue

[i] terms of payment.
[ii] how to apply.
[iii]any sepal tax benefits.
4 particulars of the issue
[i]objects .[ii] project cost. [iii] means of
financing[including contribution of prompters .
5 company management and project
6 certain prescribe particulars to the company and others
listed co under same management which made any
capital issue during the last 3 years.
Management perception of risk factors
Statutory requirements to a prospectus

1 issue after incorporation .

2 dating of prospectus [sec55]
3registraction of prospectus [sec60]
4 the prospectus must issue within 90 days after the date
on which a copy thereof has been delivered for
registration.

Fundamental Rights
Meaning:-
 Rights which are considered essential or fundamental
for the well-being of a person are called Fundamental
Rights.

 The Fundamental Rights embodied in the Indian

constitution acts as a guarantee that all Indian citizens
can and will lead their life’s in peace as long as they
live in Indian democracy.
 The Fundamental Rights in India preserve in the Part
III of the Constitution of India guarantee civil
liberties such that all Indians can lead their lives in
peace and harmony as citizens of India.
 Fundamental rights for Indians have also been aimed
at overturning the inequalities of pre-independence
social practices. Specifically, they have also been
used to abolish un touch ability and hence prohibit
discrimination on the grounds of religion, race, caste,
sex, or place of birth. The six fundamental rights
are:-
 1. Right to equality
 2. Right to freedom
 3. Right against exploitation
 4. Right to freedom of religion
 5. Cultural and educational rights
 6. Right to constitutional remedies
 1) Right to equality:- Right to equality is an
important right provided for in Articles 14, 15, 16, 17
and 18 of the constitution.
 a)Equality before law(Article 14)
 b)Social equality and equal access to public
areas(Article 15)
 c) Equality In matters of public employment(Article
16)
 d)Abolition of untouchability(Article 17)
 e)Abolition of Titles(Article 17 )
 f)Abolition of Titles: (Article 18)
 )Right to freedom:-The Constitution of India
contains the right to freedom, given in articles 19, 20,
21 and 22.
 a)Freedom of speech and expression

 b)Freedom to assemble peacefully without arms
 c)Freedom to form associations or unions
 d)Freedom to move freely throughout the territory of
India
 e)Freedom to reside and settle in any part of the
territory of India
 f)Freedom to practice any profession or to carry on
any occupation.

g)Protection with respect to conviction for offences

h)Protection of life and personal liberty
i)Rights of a person arrested under ordinary
circumstances
3)Right against exploitation:-
Child labour and Begar is
prohibited under Right against exploitation. The right
against exploitation, given in Articles 23 and 24,
provides for two provisions, namely the abolition of
trafficking in human beings and Begar (forced labor),
and abolition of employment of children below the
age of 14 years in dangerous jobs like factories and
mines.
4)Right to freedom of religion:Right to freedom of
religion, covered in Articles 25, 26, 27 and 28,
provides religious freedom to all citizens of India.
The objective of this right is to sustain the principle
of secularism in India.

5)Cultural and educational rights:As India is a

country of many languages, religions, and cultures,
the Constitution provides special measures, in
Articles 29 and 30, to protect the rights of the
minorities. Any community which has a language
and a script of its own has the right to conserve and
develop them.
6)Right to constitutional remedies:Right to
constitutional remedies empowers the citizens to
move a court of law in case of any denial of the
fundamental rights. For instance, in case of
imprisonment, the citizen can ask the court to see if it
is according to the provisions of the law of the
country