Articles of association
Definition:- British The internal rule book that every incorporated organization must have and work by. It forms a part of the constitution of an organization. The articles of association are a contract (1) between the members (stockholders, subscribers) and the organization and (2) among the members themselves. It sets out the rights and duties of directors and stockholders individually and in meetings. Certain statutory clauses (such as those dealing with allotment, transfer, and forfeiture of shares) must be included; the other clauses are chosen by the stockholders to make up the bylaws of the organization. A court, however, may declare a clause ultra vires if it is deemed unfair, unlawful, or unreasonable. A copy of the articles is lodged with the appropriate authority such as the registrar of companies. Articles are public documents and may be inspected by anyone (usually on payment of a fee) either at the premises of the organization and/or at the registrar's office. Lenders to the organization take special interest in its provisionsthat impose a ceiling on the borrowings beyond which the organization's management must get shareholders' approval before taking on more debt. The usual American term is articles of incorporation.
What is ARTICLES OF ASSOCIATION?
Articles subscribed by the members of a joint-stock company or corporation organized under a general law, and which create the corporate union between them. Such articles are in the nature of a partnership agreement, and commonly specify the form of organization, amount of capital, kind of business to be pursued,location of the company, etc. Articles of association are to be distinguished from a charter. in that the latter is a grant of power from the sovereign or the legislature.
In corporate governance, a company's articles of association (called articles of incorporation in some jurisdictions) are a document which, along with the memorandum of association (in cases where the memorandum exists) form the company's constitution, defining the responsibilities of the directors, the kind of business to be undertaken, and the means by which the shareholders exert control over the board of directors. A company is an incorporated body. So there should be some rules and regulations are to be formed for the management of its internal affairs and conduct of its business as well as the relation between the members and the company. Moreover the rights and duties of its members and the company are to be recorded. This is why Articles of Association are necessary. The Articles of Association is a document that contains the purpose of the company as well as the duties and responsibilities of its members defined and recorded clearly. It is an important document which needs to be filed with the Registrar of companies. In the Table A of Schedule 1 of the Companies Act, 1956 is given a model regulations for the management of the company limited by shares. All or any of the regulations contained in Table A may be adopted by a company limited by shares. Articles of Association is a document which all companies should prepare. The Article of Association contains the following details: 1. The powers of directors, officers and the shareholders as to voting etc., 2. The mode and form in which the business of the company is to be carried out. 3. The mode and form in which the changes in the internal regulations can be made. 4. The rights, duties and powers of the company as well as the members who are included in the Articles of Association. The article is binding not only to the existing members, but also to the future members who may join in the future. The hires of members, successors and legal representatives are also bound by whatever is contained in the Article. The Articles bind the company and its members as soon as they sign the document. It is a contract between the company...