What is Articles of Association (AOA)?
Articles of Association (AOA) describes the rules and regulations for the internal management of the company.
Articles of Association has to be carefully drafted at the time of Company Registration considering the The provisions of the articles are binding on the members as well as the company. The AOA should always be in harmony with the MOA of the company, meaning which the Articles cannot prescribe rules, which is beyond the powers mentioned in the Memorandum.
Articles of Association generally prescribes the relation between shareholders and Board of Directors, relation among shareholders and Directors themselves.
It usually contains regulation relating to Share capital and Variation rights, Lien, Calls on Shares, Transfer and Transmission of shares etc. The company may also prescribe additional matters necessary for the management of the company in its AOA.
Articles of Association of Private Limited Company Vs. Public Limited Company
Private Limited Companies are free to have certain specific restrictions in AOA regarding Transfer of shares and Meeting of Board / General Meetings.
Articles of Association (AOA) and Shareholders Agreement (SHA)
If there is a Shareholder Agreement between different classes of shareholders or promotes and investors, clauses of SHA can be added to AOA subject to certain conditions.
Contents of Articles of Association
Contents of Articles of Association of a limited company is prescribed in Table-F of the Companies Act, 2013. Generally, the contents of AOA are as follows:
- Private Company
- Share Capital and Variation Of Rights
- Preference Shares
- Alteration to Memorandum
- Control of Shares
- Shares held Jointly
- Increase of Capital
- Lien on Shares
- Calls on Shares And Transfer Of Shares
- Transmission of Shares
- Forfeiture of Shares
- Alteration of Capital
- Capitalisation of Profits
- Buy-Back of Shares
- Issue of Shares In Kind
- General Meetings
- Proceedings at General Meetings
- Voting Rights and Proxy
- Proceedings of The Board
- Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer.
- Common Seal
- Borrowing Powers
- Operation of Bank Accounts
- Dividends and Reserve
- Winding Up
- Execution Clause