ARTICLES OF ASSOCIATION

1) Articles of Association of a company contain the rules and Regulations relating to the Management of its internal Affairs. 2) It defines the rights, powers and duties of the Management. 3) It must not contain anything which is against the memorandum of association or against the companies Act or Public policy.

 4) A public company limited by shares may Register its own Articles of Association or it may adopt Table A . 5) A company limited by Guarantee with out having share capital may file its own Articles or may adopt Table C. 6) The Articles of Association must be printed, divided into paragraphs, numbered consecutively and signed by each signatory to the MOA in the presence of at least one attesting witness.

Articles OfAssociation
A document that specifies the regulations for a company's operations. The articles of association define the company's purpose and lays out how tasks are to be accomplished within the organization, including the process for appointing directors and how financial records will be handled.

The articles of a company must contain the following restrictions.

Restrict the right to transfer shares. Limit the number of members to fifty.

Contents in the Articles of Association The extent to which Table A is applicable. Different classes of shares Procedure of making an issue of share capital Adoption of preliminary contracts. Number and value of shares Allotment of shares Calls on shares Transfer of shares Forfeiture,reissue,surrender of shares Alteration of share capital Share certificates Conversion of shares in to stocks Meetings and proceedings Voting rights , and polls Appointment , Remmunaration,etc of Directors

Borrowing powers Dividend and Reserves Accounts and audit Procedure of winding up Seal of the company Rules as to resolutions Appointment ,powers, duties, qualification, remuneration of managing director ,manager and secretary

Companies which must have Unlimited Companies: Articles The Articles of such a company must
state:
Total number of members; and Share capital.

Companies limited by Guarantee:

Articles of such company must state total number of members.

 Private Companies limited by shares: contd.

No Article Company

must include requirements of Section 3(1)(iii).

A public limited company having share capital may be registered without Articles.

Differentiate between MOA&AOA AOA POINTS MOA

Nature contents Charter of the company Objects and powers of the company Relations b/w company and with outside world. Supreme document Internal rules and regulation Bye-laws for carrying out the companies objects Relations with company and its members Subordinate to the MOA

Relations defined

status

FILLING
Alteration Legal effects

Must file
Strict restriction Cannot ratified

Adopt Table A
Altered by resolution

ratified

 A)The alteration must not be inconsistent with the provisions of companies Act: Cannot be made so as to increase the liability of any member without concent. B)The Alteration must not be inconsistent with the conditions contained in the memorandum. Must not override the memorandum.

Alteration of Articles

 The alteration must not be inconsistent with the alteration ordered by company law board. When CLB has amended the MOU or AOA,the company can make no alteration which is inconsistent with the CLB.

 C) Approval of central govt must also be obtained in certain cases Conversion of public company in to private company. Alteration relates to any provision regarding the Appointment and reappointment of managing or whole time director

D)The alteration must not derive any person of his right according to contract. Allen vs. the gold reefs of west Africa ltd. E) The alteration must be bonafide for the benefit of the company as a whole.

 f)The alteration must not constitute a fraud on the minority. Menier vs Hooper s telegrafh works g) the alteration must be bonafide for the benefit of the company as a whole.

Binding force of memorandum and articles

Company is bound to its members case-Re peveril gold mines ltd Each member is bound to the company. Case-Welton vs saffery Neither the company nor the members are bound to outsiders.

Doctrine of Constructive notice and Indoor Management

Persons dealing with the company have to satisfy themselves. But need not know the internal irregularity. Royal British Bank V. Turquand (Turquand Rule) Directors issuing a bond. The doctrine of Constructive notice can be invoked by the company to operate against the persons dealing with the company.

Exceptions to the Doctrine of Where the outsider cannot claim the relief on the grounds of Indoor management Knowledge of irregularity No knowledge of articles Negligence Forgery