Articles of Association (AOA)¶
The Articles of Association (AOA) plays a crucial role in the management and administration of a company. Acting as the bye-laws or the rules and regulations, the AOA governs the internal affairs and the conduct of business, establishing the rights of the members of the company inter se and forming a contract between the company and its members.
Importance of AOA¶
- The AOA is instrumental in the governance of a company's internal operations and the management of its business activities.
- It outlines the rights of the members of the company among themselves and acts as a contractual agreement between the company and its members.
- Every company is mandated to register its AOA, which is then used to guide its internal management and operations.
Statutory Requirements¶
As per the statutory requirements, the AOA must be: - Printed, divided into paragraphs, and numbered consecutively. - Adequately stamped, signed by each subscriber to the memorandum, and duly witnessed. - Filed alongside the memorandum during the registration process.
Contents of AOA¶
The AOA typically includes provisions regarding: 1. The adoption or exclusion of preliminary contracts. 2. The number and value of shares, including preference shares. 3. Procedures for allotment, calls on shares, lien on shares, transfer, and transmission of shares. 4. Rights concerning nomination, forfeiture of shares, alteration of capital, buyback, and share certificates. 5. Rules pertaining to dematerialization, conversion of shares into stock, voting rights, proxies, and meetings. 6. Details on directors, their appointment, powers, remuneration, and meetings. 7. Provisions for additional directors, nominee directors, managing director, whole-time director, manager, secretary, and the company seal. 8. Guidelines for remuneration of directors, general meetings, borrowing powers, dividends, reserves, accounts, audit, winding up, indemnity, and capitalization of reserves.
Forms of AOA¶
Under Schedule I of the Companies Act, 2013, the forms specified for the AOA are: - Table F for companies limited by shares. - Table G for companies limited by guarantee and having a share capital. - Table H for companies limited by guarantee and not having a share capital. - Table I for unlimited companies and having a share capital. - Table J for unlimited companies and not having a share capital.
The AOA is subordinate to the Memorandum of Association (MOA) but is a key document that ensures the smooth functioning and governance of a company's internal matters. It must be drafted in accordance with the MOA and the provisions of the Companies Act, 2013, to ensure compliance and effective management.
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