This ppt covers the definition of AoA, Contents of AoA, Alteration of AoA

1. Dr.T.Sivakami
AssistantProfessor
PG&ResearchDepartmentofManagement Studies
BonSecoursCollegeforWomen
Thanjavur

2. ARTICLES OF ASSOCIATION

3. Introduction
Articles of association form a document that specifies the regulations for a
company's operations and defines the company's purpose. The document lays
out how tasks are to be accomplished within the organization, including the
process for appointing directors and the handling of financial records.
Every company is required to file Articles of Association along with the
Memorandum of Association with the Registrar at the time of its registration.

4. What Are Articles of Association?
The articles of association are the rules and regulations of a company framed for the purpose
of internal management of its affairs. It deals with the rights of the member of the company
internal affairs.
Articles of Association are the rules, regulations and bye-laws for governing the internal
affairs of the company.
They may be described as the internal regulation of the company governing its management
and embodying the powers of the directors and officers of the company as well as the
powers of the shareholders.
They lay down the mode and the manner in which the business of the company is to be
conducted.

5. Definition
Companies Act defines ‘Articles as Articles of Association of a company as originally
framed or as altered from time to time in pursuance of any previous companies Acts.
They also include, so far as they apply to the company, those in the Table A in
Schedule I annexed to the Act or corresponding provisions in earlier Acts.

6. Following points should be noted regarding drafting of AoA:
In framing Articles of Association care must be taken to see that regulations framed do not
go beyond the powers of the company it self as contemplated by the Memorandum of
Association nor should they be such as would violate any of the requirements of the
companies Act, itself. All clauses in the Articles ultra vires the Memorandum or the Act shall
be null and void.
Article of Association are to be printed, divided into paragraphs, serially numbered and
signed by each subscriber to Memorandum with the address, description and occupation.
Each subscriber shall sign in the presence of at least one witness who shall attest the
signatures and also mention his own address and occupation.

7. Contents of Articles of Association
Articles generally contain provision relating to the following matters;
(1) the exclusion, whole or in part of Table A;
(ii) share capital different classes of shares of shareholders and variations of
these rights
(iii) execution or adoption of preliminary agreements, if any;
(iv) allotment of shares
(v) lien on shares
(vi) calls on shares forfeiture of shares
(viii) issue of share certificates
(ix) issue of share warrants
(x) transfer of shares
(xi) transmission of shares
(xii) alteration of share capital

8. Contents of Articles of Association
xiii) borrowing power of the company
(xiv) rules regarding meetings
(xv) voting rights of members
(xvi) notice to members
(xvii) dividends and reserves
(xviii) accounts and audit
(xix) arbitration provision, if any
(xx) directors, their appointment and remuneration
(xxi) the appointment and reappointment of the managing director, manager and
secretary
(xxii) fixing limits of the number of directors
(xxiii) payment of interest out of capital;
(xxiv) common seal; and
(xxv) winding up.

9. Model form of Article
Different model forms of memorandum of association and Articles of Association of various
types of companies are specified in Schedule I to the Act. The schedule is divided into
following tables.
Table A deals with regulations for management of a company limited by shares.
Table B contains a model form of Memorandum of Association of a company limited by
shares.
Table C gives model forms of Memorandum and Articles of Association of a company
limited by guarantee and not having a share capital.
Table D gives model forms of Memorandum and Articles of Association of a company
limited by guarantee and having a share capital. The Articles of such a company contain in
addition to the information about the number of members with which the company
proposes to be registered, all other provisions of Table A.

10. Model form of Article
Table E contains the model forms of memorandum and Articles of Association of an
unlimited company.
A Public Company may have its own Article of Association. If it does not have its own
Articles, it may adopt Table A given in Schedule I to the Act.
Adoption and application of Table A (Section 28). There are 3 alternative forms in which a
public company may adopt Articles :
It may adopt Table A in full
It may wholly exclude Table A, and set out its own Articles in full
It may frame its own Articles and adopt part of Table A.
In other words, unless the Articles of a public company expressly exclude any or all
provisions of Table A shall automatically apply to it.

11. Alteration of Articles of Association
Section 31 grant power to every company to alter its articles whenever it desires by passing
a special resolution and filing a copy of altered Articles with the Registrar.
An alteration is not invalid simply because it changes the company’s constitution. Thus in
Andrews v Gas Meter Co., A company was allowed by changing articles to issue preference
shares when its memorandum was silent on the point.
Alteration of articles is much easier than memorandum as it can be altered by special
resolution. However, there are various limitations under the Companies Act to the powers
of the shareholders to alter the articles.
In case of conversion of a public company into a private company, alteration in the articles
would only be effective after approval of the Central Government [Section 31]. The power
are now vested with the Registrar of Companies

12. Alteration of Articles of Association
Alteration of the articles shall not violate provisions of the Memorandum. It must be
made bonafide the benefit of the company. All clauses in the articles ultra vires the
Memorandum shall be null and void, and the articles shall be held inoperative.
Alteration must not contain anything illegal and shall not constitute fraud on the
minority.
Alteration in the articles increasing the liability of the members can be done only with
the consent of the members.
A company cannot by altering articles, justify a breach of contract. Any alteration so
made shall be valid as if originally contained in the articles.
Where a special resolution has been passed altering the articles or an alteration has
been approved by the Central Government where required, a printed copy of the
articles so altered shall be filed by the company with the Registrar of Companies within
one month of the date of the passing of special resolution

15. Binding of Memorandum
and Articles of Association

16. Members bound to the Company:
The members cannot contravene the provisions of the article of
association or the memorandum of association. Once they have
subscribed to such documents they are completely bound by it and
cannot later say they were not aware of such provisions, hence their
subscription is essential.

17. Company to the Members:
A company has to follow all provisions of the memorandum and
articles. It cannot contravene it as such provisions have been
subscribed to and agreed by the share holders. The company would
be answerable to the shareholders on an event of such
contravention.

18. Members inter se:
• The members are bound among themselves due to the provisions of
the articles of association. But they can enforce their right only in
the capacity of being a member and not an individual . And such
rights can only be enforced through the company.

19. Not bound to Outsiders:
Neither the company nor the members are bound to the outsiders by
the provisions of the articles. In the case of Browne vs Trinidad, The
plaintiff was agreed to be made director and not removable till a
certain date, it was so provided by the articles. But
such provision could not be enforced as the plaintiff was an outsider.
Even a members becomes an outsider, when he acts outside the
capacity of a member.