‘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 law of this act. The articles of association are the rules and regulations of a company framed for the purpose of internal management of its affairs. The articles of association of a company are sub - ordinate to and are controlled by the memorandum of association. It deals with the rights of the member of the company inter-se. The articles are framed for carrying out the aims and object of the Memorandum of association.
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. It is not obligatory to register articles in the case of a public company limited by shares. However, a private company, a company limited by guaranteed and an unlimited company must register their articles along with the memorandum. 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.
In the case of a private company, articles must contain provisions which (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. 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.
ARTICLES USUALLY CONTAIN RULES AND BYE-LAWS ON MATTERS LIKE Different classes of shares and their rights. Procedure of making an issue of share capital and allotment thereof. Procedure of issuing share certificates. Lien on shares. Forfeiture of shares and the procedure of their re- issue. Procedure for transfer and transmission of shares. The time lag in between calls on shares. Conversion of shares into stock. Payment of commission on shares and debentures to under-writers.
Rules for adoption of preliminary contracts, if any. Re-organisation and consolidation of share capital. Alteration of share capital. Borrowing powers of directors. Procedure for convening, holding and conducting different kinds of general meetings. Voting rights of members, proxies and polls, Payment of dividends and creation of reserves. Appointment, powers, duties, qualifications, remuneration etc., of directors. Use of the Common Seal of the company. Keeping of books of accounts and their audit.
Appointment and remuneration etc., of auditors. Capitalization of profits. Board meetings and proceedings thereof. Rules as to resolutions. Appointment, powers, duties, qualifications, remuneration etc., of managing director, manager and secretary, if any. Arbitration provision, if any. Provision for such powers which cannot be exercised without the authority of articles, for example, the issue of redeemable preference shares; issuing share warrant to bearer; refusing to register the transfer of shares; reducing share capital of the company. Winding up.