Articles are the regulations or bye-laws of a company for carrying into effect the objects of the company as defined by the company in its memorandum of association and for the management of its internal affairs.

1. Legal Environment of Business

2. Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
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3. Definition
• Articles are the
regulations or bye-laws
of a company for
carrying into effect the
objects of the company
as defined by the
company in its
memorandum of
association and for the
management of its
internal affairs.

4. Definition
• While memorandum of
association is the
foundation of the
company, the articles of
association are the rules
and regulations framed
for the purpose of
managing its internal
affairs and for the
benefit of the share
holders.

5. Companies which must have their
own articles
• The following companies
shall have their own
articles.
– Private companies limited
by shares.
– Companies limited by
guarantee.
– Unlimited companies.

6. Contents of articles of association
• The business of the
company.
• The share capital, different
classes of shares, right of
different classes of share
holders.
• Execution of preliminary
contracts.
• Procedure of allotment of
shares.
• Procedure of issuing of
share certificates.

7. Contents of articles of association
• Dividends and reserves.
• Keeping of books of
accounts and their audit.
• Common seal of the
company.
• Payment of interest out of
capital.
• Winding up.

8. Contents of articles of association
• Alteration of share capitals.
• Issue of share warrants.
• Rules regarding meetings.
• Voting rights of members.
• Borrowing power of the
company.

9. Alteration of articles of association
• Companies have been given
wide powers to alter their
articles. A company can
never replace its articles. It is
only regulations contained
therein which may be
changed

10. Procedure for alteration
• A company may by passing
a special resolution alter
regulations contained in its
Articles any time. A copy of
the resolution shall be filed
with the Registrar within
30 days of passing.

11. Restriction on the alteration of
articles
• The alteration must not contravene
the provisions of the memorandum.
• The alteration must be bona fide for
the benefit of the company as a
whole.
• A company cannot justify a breach
of contract by altering its articles.
• A company may not deprive itself of
the right to alter its articles, as the
power of the company to alter its
articles is statutory and absolute.
• The alteration should not make the
articles unalterable.
• The alteration should not contain
anything illegal.

12. Relations between Article and
Memorandum
• The articles are
subordinate to
memorandum.
• The memorandum must be
read in conjunction with
the articles.
• The terms of the
memorandum cannot be
modified or controlled by
articles.

13. Distinction between memorandum
and articles
No Memorandum of association Article of association
1 Supreme document Subordinate to memorandum
2 Every company must have its
own memorandum
A company limited by shares need
not have articles of its own.
3 It is the constitution of the
company
These are rules of management of
the company
4 It is a contract between
company and outside person
dealing with it.
It creates a relationship between
the company and its members.
5 It cannot be altered easily. They can be altered easily passing
special resolution.