What is Articles of Association – AOA

Like MOA, Articles of Association (AOA) is also prepared at the time of incorporation of a company in India. Different countries like United Kingdom, Pakistan, Bangladesh, Srilanka also have this concept of preparation of AOA.

An AOA defines the rules and regulations which a company will be following while carrying out the activities as mentioned in the memorandum of association. A company registered with India cannot go against these rules and regulation that are set in the AOA. 

Why Articles of Association – AOA

What is Article of Association – AOAWhen you incorporate your company in India, most of the outsiders will be interested to know how well the company is managed and what are its rules and regulations that manages its internal affairs and conduct of its business. For this reason AOA is necessary. AOA is prepared by clearly documenting the purpose of the company’s registration as well as its duties and responsibilities. While registering your company this document has to be filled with ministry of corporate affairs along with other documents like Memorandum of association.

Contents of Articles of Association – AOA

An AOA contains followings;

  • Constitutions
  • Interpretation
  • Private company clause
  • Share Capital Clause
  • Other rules and regulations
  • Company’s seal
  • Subscription page

In addition to the above list an AOA can have rules and regulations for some other heads. The above list just a over view of AOA.

Constitutions

Constitution clause of AOA will state under which regulation, act this articles of association is prepared. Like for private limited companies the regulations are set it table A of the first schedule to the companies act, 1956. If articles of association’s content differ from the meaning as presented in the companies act then that need to be specifically mentioned here.

Interpretation

You define various terms that are used in the rules and regulation applicable to AOA. If you go by the company act’s definition then write it there or else have your own definition written there.

Private Company Clause

Private company clause is applicable only to private limited companies. You write specific details like minimum share capital, number of members should not increase 50, no invitation to public for subscription to company, prohibit any invitation or acceptance from public.

This will define that the company is accepting the rules and regulation to set up it as a private limited company. This is a mandatory requirement and you need to put it in your articles of association.

For public limited company this clause will not be applicable.

Share Capital Clause and other clause related to shares

You need to mention authorized capital of the company and how the company will forfeiture its share, buy back its share, how share certificate will be issued to the shareholders and how share can be transferred.

Other rules and regulations

AOA mention various rules and regulations that are required to carry on the company’s business under different heads. Followings can be part of the AOA under which different rules and regulations are required to be mentioned;

  • General meetings
  • Quorum
  • First director of the company
  • Powers and duties of directors
  • Borrowing powers of directors
  • Accounts and Audit
  • Secrecy
  • Indemnity
  • Nomination of shares
  • Winding up

The AOA can also have additional rules and regulation in addition to the above mentioned details.

Company’s Seal

Company’s seal is the most important asset of the company. The rules and regulations of articles of association should clearly state how you are going to keep the seal, where and how the seal is going to be used.

Subscription Page

Subscription page to the AOA is like the same that is used in memorandum of association with a difference that the shareholding ratios are not mentioned in the Articles of association.

Following things the subscriber should mention in the last page of AOA in their own handwriting;

  • Name:
  • Fathers Name:
  • Address:
  • PIN No:
  • Occupation:
  • Signature

Other relevant points in Articles Of Association

  • You can alter an AOA by passing a special resolution
  • Articles of association must not violate MOA.
  • Articles of association is a binding contract between the company and members.

You can download Airtel’s AOA for your reference.

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