The document discusses the articles of association, which are the internal rules and regulations that govern a company. It explains that articles of association define how a company is administered, including provisions around share capital, directors, meetings, and other internal operations. The document also discusses how and when articles of association can be altered, with limitations like requiring shareholder approval and not contradicting the company's memorandum.

1. ARTICLES OF ASSOCIATION &
IT’S ALTERATIONS
Presented By: - Ankit Shah
s.ankit.91@gmail.com

2. WHAT?
• The articles of association of a company are its by-
laws or rules and regulations which govern the
management of its internal affairs and the conduct of
its business.
• According to Section 2(2) of the Companies Act,
1956 ‘articles’ means the articles of association of a
company as originally framed or as altered from time
to time in pursuance of any previous companies laws
or of the present Act.

3. WHY?
• To regulate the internal management of the company.
• Also they define the powers of its officers.
• Articles are like the partnership deed in a partnership.
They set out provisions for the manner in which the
company is to be administered.
• They provide for matters like the making of calls,
forfeiture of shares, directors’ qualifications, appointment,
powers and duties of auditors, procedure for transfer and
transmission of shares and debentures.

4. HOW?
• Articles usually contain provisions relating to the
following matters-
• 1. Share capital including sub division thereof, rights of
various shareholders, the relationship of these rights,
payment of commission, share certificates,
• 2. Lien of shares,
• 3. Calls on shares,
• 4. Transfer of shares,
• 5. Transmission of shares,
• 6. Forfeiture of shares,
• 7. Surrender of shares,

5. Continued…
• 8. Conversion of shares into stock,
• 9. Share warrant,
• 10. Alteration of capital,
• 11. General meetings and proceedings thereat,
• 12. Voting rights of members, voting by poll, proxies,
• 13. Directors remuneration, qualifications, powers and
proceedings of Board of directors’ meetings,
• 14. Dividends and reserves,
• 15. Accounts and audits,
• 16. Borrowing powers,
• 17. Winding up.

6. Continued…
• Their are certain matters in respect of which powers
can be exercised by the company only if the articles
so provide.
• The articles must contain provisions in respect of all
matters which are required to be contained therein.

7. WHO?
• Under Section 26, the following companies must
have their own articles, namely
1. Unlimited companies.
2. Companies limited by guarantee.
3. Private companies limited by shares.
• A public company may have its own Articles of
association. If it does not have its own Articles, it
may adopt Table A given in Schedule I of the Act.

8. Under Section 27
• In the case of an unlimited company, the articles shall
state the number of the members, with which the
company is to be registered, and if it has a share
capital, the amount of share capital with which it is to
be registered.
• In the case of a company limited by guarantee, the
articles shall state the number of members with which
the company is to be registered.

9. Continued…
• In the case of a private company, articles must
contain provisions which are;
(a) Restrict the right to transfer its shares;
(b) Limit the number of its member to fifty excluding
past and the present employees of the company;
(c) Prohibit any invitation to the public to subscribe for
any share in or debenture of the company.

10. A Must…
• The articles must be printed and divided into
paragraph, numbered consecutively.
• The articles must be signed by each subscriber
of the memorandum in the presence of at least
one witness who will attest the signature and
likewise add his address, description and
occupation, if any.

11. CAN THEY ALTER?
• Yes, the companies have wide powers to alter their
articles.
• Articles of association may be altered by a company
by passing a special resolution to that effect.
• The altered articles will bind the members in the
same way as did the original articles.
• But, the company must file with the registrar a copy
of the special resolution within one month from the
date of its passing.

12. LIMITATIONS
• 1. The alteration must not be inconsistent with or go
beyond the provisions of the memorandum.
• 2. The alteration must not provide for anything which
is opposed to the provisions of the act.
For example: Articles cannot authorize a
company to purchase its own shares.
• 3. The alteration of articles must be made in good
faith for the benefit of the company as a whole.

13. Continued…
• 4. The alteration of articles must not constitute a
fraud on minority.
• 5. No member of a company will be bound by any
alteration made in the memorandum or the articles
after he become a member, unless he agrees in writing
before or after the alteration is made.
• 6. No alteration can be made in the articles which has
the effect of converting the public company into a
private company, unless such alteration has been
approved by the central government.

14. LAST BUT NOT THE LEAST…
• 7. An alteration in the articles which causes a breach
of contract with an outsider will be in-operative.
• 8. The alteration must not sanction anything which is
illegal.