Articles of association

Regulations or bye-laws of a company. Management of internal affairs. Provides modes by which objectives are to be fulfilled. Define the duties, rights and the powers of the governing body. AOA must be printed, divided in to paragraphs, numbered consecutively and signed by each subscriber. Unlimited companies, companies limited by guarantee, private companies limited by shares have their own articles which must be registered along with MOA.

Contents of Articles of Association

1. Share capital, rights of shareholders, variation of these rights, payment of commissions, share certificates. 2. Call on shares, lien on shares, transfer of shares, forfeiture of shares. 3. Conversion of shares into stock. 4. Business of company. 5. Share warrants. 6. Alteration of capital.

7.General meetings and proceedings. 8.Voting rights of members. 9.Directors,their appointment, remuneration, qualification. 10.Powers and proceedings of board of Directors. 11.Appointment ,powers, duties, remuneration of managers and secretary. 12.Dividends and reserves. 13.Keeping of books of accounts and Auditors appointment. 14.Common seal of company. 15.Capitalization of profit and winding up.

Limitations in alteration of Articles

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Must not be against the provisions of Act. Must not be inconsistent to the Memorandum. Must not sanction anything illegal. Approval of central government for conversion of public company into private company. No increase in the liability of members. Alteration by special resolution only. Should not cause breach of contract. Must be for the benefit of the company. Articles cannot be made unalterable. Retrospective alteration.

Memorandum
1. Charter of company and supreme document 2. defines scope of its activities. 3. Relation of Co with outside world.

Articles
Subordinate to memorandum
Document which regulates internal management which are rules made by company

4. Every Co must have its own memorandum.

Rights of the members of the Co with the co and interse. Co limited by shares need not register its articles. table A applies.

Can be altered easily by passing special resolution. 6.Memorandum cannot Not only limited by Act but also cannot exceed give power to co to do the power contained in anything contrary to the Memorandum. provisions of the Act. 7. Lays down objects for Lays down rules and which the Co is formed. regulations to achieve those objectives. rule of ratification 8.Rule of ratification applies an act ultravires does not apply to Acts an article ultravires the memorandum. 5.Cannot be altered easily.

Doctrine of ultravires.
Beyond the power. Any act done which is against object clause in the memorandum of association is void. Cannot be ratified even if all the shareholders agree. This rule is to protect future shareholders and the public at large who deal with the company. Ashbury Railway carriage Co V. Riche.

Doctrine of constructive notice

Knowledge as to the contents of the documents is known as constructive notice. Any public document registered in a public office are open for public inspection on payment of a nominal fee. It is presumed that everyone dealing with the co is deemed to have known the contents in MOA &AOA.

Doctrine of indoor management. (exception to the rule of constructive notice) Royal British Bank V. Turquand. A person dealing with the co is not bound to enquire into the regularity of the internal proceedings. A contracting party is entitled to assume that the companys internal regulations necessary for contract are complied with. Turquand rule.

Exceptions to indoor management

Knowledge of irregularity. Negligence. Acts void abinito and forgery. Agent acting outside the scope of his authority. No knowledge of the contents of articles.