Articles of Association (AOA)
As per Section 2(5) of the Companies Act, 2013 articles means the Articles of Association in Company Law (AOA in company law) of a company originally framed or altered or applied in pursuance of any previous company law or of this Act.
Articles of Association (AOA) objectives
Articles of Association contains the rules and regulations as well as bye-laws for the internal management of the company.
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The company’s AOA must include the rules for managing the business.
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Additionally, the AOA must include any mandated topics.
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It won’t stop a corporation from putting any additional information in its AOA that would be deemed crucial for its management.
Content of Articles of Association (AOA)
In company law, the articles of association typically cover the following areas-
1. Company Purpose: The articles define the company’s objectives, activities, and the scope of its business operations.
2. Shareholders’ Rights: The articles outline the rights and obligations of shareholders, such as voting rights, dividend entitlements, and transferability of shares.
3. Directors’ Powers and Duties: The articles specify the powers and duties of directors, including their appointment, removal, and remuneration. It also outlines their responsibilities in managing the company.
4. Board Meetings: The articles define how board meetings are convened, quorum requirements, voting procedures, and record-keeping of minutes.
5. Decision-Making: The articles lay down the decision-making process for major company matters, such as significant investments, borrowings, mergers, or acquisitions.
6. Share Capital and Financing: The articles outline the company’s share capital structure, including the issue and transfer of shares, rights attached to different classes of shares, and procedures for raising additional capital.
7. Dividends and Reserves: The articles cover the distribution of profits through the declaration and payment of dividends. They also govern the creation and allocation of reserves.
8. Borrowing Powers: The articles define the company’s authority to borrow money, issue debentures, and create charges over its assets as security for loans.
9. Shareholders’ Meetings: The articles detail the procedures for convening and conducting general meetings of shareholders, including annual general meetings and extraordinary general meetings.
10. Winding Up and Liquidation: The articles specify the process for winding up the company, appointing liquidators, and distributing the company’s assets among the shareholders.
Articles of Association are a crucial document that forms an integral part of a company’s constitutional framework. They provide clarity on the rights and obligations of all parties involved, ensuring smooth internal governance and effective management of the company.
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