An article of association is a legal document that states how to govern the internal affairs of the company. In the absence of it, Table A will be applicable. For governing the management and its affairs and avoiding disputes, AOA is drafted with the consent of members.
Unlimited Liability, Limited by guarantee, Partnership Company and private limited by shares must submit their article of association to the registrar. It should be signed by each member of a memorandum of association. Public limited by share may adopt Table A 1985.
Contents of Article of Association
Every company has its own rules and regulation of management. There is no standard format except Table A. following are the content of the Article of Association which are point out in it. They are not all mandatory neither complete list. As like partnership deed members can be legitimatized anything but should be within the regulatory act or ordinance of companies.
- Procedure for the Issuance of Shares
- Transfer of Share
- Issuance of Dividend procedure
- Voting powers of shareholders
- Company Banks and operation
- Appointment of the internal and external auditor
- Hiring Procedure for CFO, CEO, Managing Director
- Director’s appointment, rights, remuneration, Powers
- Procedure and proceeding of Board meetings
- When and how winding up of company
- Annual general meeting Procedure
- Appointment of Company Secretary
- Alteration of Capital
Alteration of Article of Association
AOA can be altered with the special resolution of members. Once its pass it will be applicable to all members. Assent principle will be applicable if no special resolution passed with conduction general meeting (when all members are agreed to alter)
Importance of Article of Association
Its play a vital role in company management affairs. Give the direction of the business, assignment, rights and duties of the executive of the business. Without a charter of management, there is a big issue for resolving any issue or dispute. Everyone play a role as per given task and limits.
Restriction on alteration of AOA
- If it conflicts with companies ordinance
- For the protection of minorities, the court may order not to alter it
If there is conflict in MOA and AOA then the memorandum of association rule will be applicable.