Articles of Association: The Articles of Association (AOA) of a company are its rules and

regulations which are framed to manage its internal affairs. It is the second document,
which is to be registered with the memorandum.
The articles play a subsidiary role to the memorandum of association. Articles define the
duties, the rights and powers of governing body between themselves and the company.
The documents containing the AOA [known as Magha carta] is a business document. It is to
be prepared carefully. It controls the management of a company and defines the rights and
duties between the members and the company.
The AOA are the bye-laws of company. Directors and other officers are required to perform
their functions according to this document. The auditors of company should also study the
provisions of various matters.
Following companies must have their AOA.
(1) Unlimited Companies.
(2) Companies limited by guarantee and
(3) Private companies
A public company limited by shares may either frame its own articles. If it does not register
articles, the regulations contained in Table A would be applicable as the articles of the
company.
Contents of Articles: Articles usually contain provisions relating to the following
matters:
1. Share capital, rights of shareholders, variation of these rights, payment of commissions,
share certificates.
2. Lien on shares.
3. Call on shares.
4. Transfer of shares.
5. Transmission of shares.
6. Forfeiture of shares.
7. Conversion of shares into stock.
8. Share warrants.
9. Alteration of capital.
10. General meetings and proceedings threat.
11. Voting rights of members, voting and poll, proxies.
12. Directors, their appointment, remuneration, qualifications, powers and proceeding of
board of directors.
13. Manager.
14. Secretary.
15. Divdiends and reserves
16. Accounts, audit and borrowing powers.
17. Capitalization of profits
18. Winding up
Form and signature of Articles (sec. 30) The Articles shall be (a) printed, (b)
divided into paragraph, and (c) signed by each subscriber of the memorandum (who Shall
add his address, description and occupation, if any) in the presence of at least 1 witness who
will attest the signature and likewise add his address, description and occupation, if any.
The AOA printed on computer laser printers should be accepted by the registrar for
registration of a company provided they are nearly and legibly printed.
Alteration of Articles: Every company has a clear power to alter its AOA by a special
resolution. It is the fundamental right of a company and therefore, it cannot be negative by
contract. For example, if there is a clause in the articles providing that the articles cannot be
altered, then it will be invalid because it is against the law. Even a company cannot deprive
itself of the power of alteration by a contract with any one.
The power of alteration of articles provided by section 31 is almost absolute subject to the
following limitations.
1. The alteration should not exceed the powers given by memorandum.
2. It must not be against the provisions of companies act.
3. It must not be illegal.
4. It should not be fraud on minority.
5. The alteration must not be inconsistent with the order of the court.
6. If a public company is converted in to private company, the approval of central govt. is
necessary.
7. An alteration which has the effect of increasing the liability of members will not be
binding on them unless they have agreed in writing.
Articles in relation to Memorandum: Articles are always regarded as subordinate to the
memorandum. Therefore, if the memorandum and articles are inconsistent (not agree), the
articles must give the way. In other words, the articles must not contain anything, which is
contrary to the provisions of memorandum. This is so because the memorandum defines
the objects for which the company has been established, while the Articles provide the
manner in which the internal management of the company is to be carried.
Some of the condition of incorporation contained in the memorandum cannot be altered
except with the sanction of the Company Law Board. AOA, on the other hand, can be altered
simply by a special resolution.
But, unless the ultra-vires rule is abolished, the memorandum will always differ from
articles in principal respect. If a company does something beyond the scope of the objects
stated in the memorandum it is absolutely void and altogether incapable of ratification.
Whereas anything done by a company in contravention of the provisions of its articles is
only irregular and can always be confirmed by the shareholders.