Articles of Association Forms of Articles of Association Table A for public Companies with share capital limited by shares Table C for companies without shares Table D for companies with share capital limited by guarantee ID: 163198
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Slide1
“ The articles of association is a document regulating the rights of members of the company among themselves and the manner in which the business of the company shall be conducted.”
Articles of AssociationSlide2
Forms of Articles of Association
Table A- for public Companies with share capital limited by shares.
Table C- for companies without shares.
Table D- for companies with share capital limited by guarantee.
Table E- for
unlimited companiesSlide3
The Articles of Association of a company should:
Be printed
Be divided into paragraphs numbered consecutively
Be signed by each subscriber of memorandum of association in the presence of at least on witness.Slide4
Contents of Articles of Association
The extent to which the rules of ‘table A’ Shall be applicable
Rules for adoption of ‘preliminary contracts’
Minimum subscription allowed
Lien on shares
Use of Common Seal of the company
Rights of Board of Directors
Winding up
Borrowing powers of directors
Conversion of shares into stock
Arbitration provisionsSlide5
Restrictions imposed on the alteration of AOA
Statutory Restrictions
Alteration must be by a special resolution
Alteration must not be inconsistent with the provisions of the Companies Act
Alteration must not be inconsistent with the memorandum of association
There must be the permission of Central Government to alter the articles
There must be written consent of the members
There must be confirmation by the Tribunal
Judicial Restrictions
The alteration must not be illegal for business
The alteration must be in good faith and for company’s benefit
The alteration must not deprive any person of his right s under a contract
The alteration should not be a fraud on the minority by the majority
The alteration must not cause breach of contract with a third partySlide6Slide7
Doctrine of Constructive Notice
According to this Doctrine, it was assumed that any person who deals with a company has not only read the company’s memorandum and articles but has understood their contents so that he knows what are the company’s limitations and its powers , and can protect himself from any possible loss .Slide8
Doctrine of Indoor Management
According to the Doctrine of indoor management outsiders dealing with the company are only required to be sure that the proposed dealings are apparently regular and consistent with the memorandum and articles. They need not enquire into the regularity of the internal proceedings of the company.Slide9
Exceptions to the Doctrine of Indoor Management
Knowledge of Irregularity
Negligence on the Part of Outsiders
ForgerySlide10
Doctrine of ultra vires
Such acts of a company which are beyond the scope of the company’s memorandum and articles are referred to as
ultravires
.
This provisions of law has two main objectives:
To protect the interest of the shareholders
To protect the interest of third partiesSlide11
Effects of Ultra vires Transaction
Void Contract
Injunction
Personal Liability of Directors
Ultra vires Acquired Property
Breach of Warranty of Authority
Ultra vires TortsSlide12
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