Articles of Association (AOA)
Articles of Association (AOA) is an important document of Company. It contains the rules and regulations or bye-laws of the company. They are related to the internal working or management of the company. It plays a very important role in the affairs of the company. It deals with the rights of the members of the company between themselves.
Objectives of Articles of Association
The Companies Act, 2013 states that the Articles of association:
- Must include the regulations for the management of the company.
- Include matters that have been prescribed under the rules.
They do not prevent a company from including additional matters in the AOA or from doing any alterations as may be considered necessary for the functioning of the company affairs.
Importance of the Articles of Association
The Article of Association is one of the most important document for the organization.
Theimportance of the AOA rests in the important guidelinesit provides for handling financial affairs of the Company, managing the powersand responsibilities of the Directors, and their relationship with the Shareholders of the Company.
The Articles details the voting rights of the members as well as the procedure of the voting. The Articles of Association protects the interests of the investors and the Shareholders. It keeps the interests of the Directors in any competing business and prevents any conflict of interest if the Articles specifies that in its provisions.
In conclusion, the Articles of Association are important for the welfare of the Company as an organization and for its smooth functioning in fulfilling its objectives as an organization.
- Company shall alter its articles as per the provisions of Companies Act and the conditions contained in the Memorandum.
- The provisions for entrenchment of articles shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.
- Company shall pass a special resolution for conversion of Public company into Private company and vice-versa.
Steps for alteration in AOA
- Convey Board meeting of director:
To alter the AOA of company by giving notice of at least 7 days.
- Hold Board meeting:
At the Board meeting, the giving resolutions in respect of alteration in AOA must be passed. Get approval to alteration in Article of Association and recommending the proposal for members consideration by way of special resolution. Fixing the date, time and venue of the general meeting and authorizing a director or any other person to send the notice for the same to the members.
- Issue notice of general meeting (Sec 101)
Notice of EGM shall be given at least 21 days before the actual date of EGM. EGM can be called on shorter notice with the consent of atleast majority in number and ninety five percent of the paid-up share capital of the company giving a right to vote at such a meeting:
- All the directors
- Auditor of company
The notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM.
- Hold general meeting (Sec 101)
- Check the quorum.
- Check whether auditor is present, if not. Then leave of absence is granted or not.
- Pass special resolution.
- Approval of alteration in AOA.
- Filing of form with ROC:
File form MGT-14 (Filing of resolution and agreements to the registrar) with the Registrar from MCA along with the requisite filing within 30 days of passing the special resolution, along with given documents:
- Certified true copies of the Special resolution along with explanatory statement.
- Copy of the notice of meeting send to members along with all the annexure.
- A printed copy of altered Article of Association.