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50 hot startups 2017

APPENDIX 4: Contents of Articles of Association

The Articles of Association (AoA) or the Articles, contain rules for the internal management of a company. It is a legal document prepared by a company to explicitly state the purpose of a company, the procedure to conduct its internal affairs and most importantly the responsibility and authority of the directors, members and other stakeholder. The Articles have to be submitted to the Registrar of Companies during formation of a company in Form INC-34 along with the Memorandum of Association in Form INC-33.

While the Memorandum deals with the external affairs of a company, the Articles essentially deal with the internal working of a company. Table F to J of Schedule 1 of the Companies Act, 2013 contain the model articles that companies can refer to. Companies may adopt wholly or in part these tables, i.e. tailor their articles depending upon specific requirements. Some of the common affairs mentioned in the Articles of a company are:
1. Share Capital
2. Alteration of Capital
3. Calls on shares
4. Rights of shareholders
5. Variation of shareholders' right
6. Issue of preference shares
7. Lien on shares
8. General Meetings
9. Proxy
10. Board of Directors and their responsibilities
11. Dividend distribution
12. Buy back of shares
13. Transmission of Shares
14. Dematerialization
15. Winding up
16. Accounts and Auditing
17. Company Seal
18. Borrowing powers
19. Company's Key Managerial Personnel - Whole-time director, manager, secretary

Articles can be altered according to Section 14 of the Companies Act. The entrenchment provision for Articles of a company protects the interest of minority shareholders by allowing amendment in the articles after getting required prior approval of the shareholders. In cases of any conflict, the Memorandum supersedes the Articles and the Companies Act supersedes both Memorandum and Articles of a company.

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