Shahrin Hossain.

Articles of Association

Concept :

Section 2(a) of the Companies Act, 1994 defines AOA as the document which lists the regulations
that govern the running of company, setting out the rights and duties of directors and shareholders,
individually and in meeting. The AOA are not set in stone and may need to be revised over time as
the business evolves. Alternation of the Articles of Association can be done as per Section 20 of the
Companies Act, 1994. It is the second crucial document for corporate governance.

According to Section 26, of the Companies Act, 2013, registration of AOA is:

• OPTIONAL for- Public Companies limited by share (if in case it does not have any AOA, Table-
A will be applicable)

• COMPULSORY for- All other companies.

The contents of AOA :

The contents of Articles of Association are as follows –

1. Full name of the company

2. Daily function and rules of management.

3. Rules regarding directors of company -

• Number of directors

• Name, address, occupation and other particulars.

• Responsibilities, duties, right and power of directors and managing director.

• Remuneration of director.

• Number and value of qualification share of directors.

4.Name and method of appointment of other Officer or institutions –

• Appointment rules of manager and secretary.

• Name, address and occupation of solicitor, broker, underwriter .

• Name & address of the banker

• Recruitment procedure for accountants and auditors.

5. Capital regulations -

• Amount of authorized capital, classification and amount of capital.

• Minimum capital amount, rules for change or increase – decrease of capital etc.

6. Rules relating share owners -

• Interrelation and rights of shareholders

• Responsibilities, powers and rights of different classes of shareholders.

7.Rules relating share –

• Total number and classification of share.

• Par value and payment system of shares

• Procedures of share issue and transfer.

• Commission and brokerage of share sales.

• Terms and conditions of share forfeiture.

8. Rules relating company meeting –

• Calling and operating system of meeting.

• Voting system and voting power of member.

9.Rules relating Borrowing power and procedure of company.

10. Rules of dividend declared and dividend transfer to the company.

11. Company bank account rules.

12. Rules relating to preservation and use of company seal.

13. Winding up procedure.

Legal effect of articles of association:

1.A registered article of association makes a contractual obligation among the members and the
company. So the members are obligated to follow the articles.

2.Company can file case against any member due to avoid articles. Any member can also file case
against other member or the company.

3.All money payable by any member to the company under the articles shall be considered as debts
due to him.

4.Since the articles of association in an open document to the company, assume that all related
parties are aware from the contents of articles. So if any parties make any transaction avoiding the
rules of articles, the company will not liable.

5. The power and responsibilities of directors are limited by the rules of articles. If any director violet
any rules of articles is to be liable personally.