Articles of Association

The Articles of Association (AOA) is a legal document that sets out the internal regulations of a company. It is filed with the registrar of companies when a company is incorporated. The AOA contains the following information:

  • The management structure of the company (e.g., the number and composition of the board of directors)
  • The voting rights of the shareholders
  • The procedures for calling and conducting shareholder meetings
  • The procedures for appointing and removing directors
  • The procedures for issuing shares and making dividends
  • The procedures for winding up the company

What are the compulsory clauses of an AOA?

The compulsory clauses of an AOA are as follows:

  • Name clause
  • Registered office clause
  • Object clause
  • Liability clause
  • Capital clause
  • Association clause
  • One-Person Company clause

What are the optional clauses of an AOA?

The optional clauses of an AOA are as follows:

  • Restriction on transfer of shares clause
  • Power to alter AOA clause
  • Power to appoint liquidator clause
  • Power to make calls on shares clause
  • Power to issue redeemable shares clause
  • Power to issue preference shares clause
  • Meetings of shareholders clause
  • Directors’ powers clause
  • Dividends clause
  • Winding up clause

MCQs on Articles of Association

  1. Which of the following is not a compulsory clause of an AOA?
    • Name clause
    • Registered office clause
    • Object clause
    • Liability clause
    • Capital clause

The answer is (d). The capital clause is an optional clause of an AOA.

  1. Which of the following is an optional clause of an AOA?
    • Restriction on transfer of shares clause
    • Power to alter AOA clause
    • Power to appoint liquidator clause
    • Power to make calls on shares clause
    • All of the above

The answer is (d). All of the above are optional clauses of an AOA.

  1. Which of the following is not a requirement for a company to have a valid AOA?
    • The AOA must be in writing.
    • The AOA must be signed by all the subscribers to the company’s memorandum of association.
    • The AOA must be filed with the registrar of companies.
    • The AOA must be in the prescribed form.

The answer is (c). The AOA does not need to be in the prescribed form. The prescribed form is only used for companies incorporated under the Companies Act of 1956.

How are the Articles of Association and Memorandum of Association related?

The Memorandum of Association (MOA) and Articles of Association (AOA) are two important documents that govern the operation of a company. The MOA sets out the basic structure and operations of the company, while the AOA sets out the internal regulations of the company.

The MOA is a public document, while the AOA is a private document. This means that the MOA is available for public inspection, while the AOA is only available to the company’s shareholders and directors.

The MOA and AOA are closely related. The AOA must be consistent with the MOA. This means that the AOA cannot contain any provisions that are inconsistent with the MOA.

If there is a conflict between the MOA and AOA, the MOA will prevail. This is because the MOA is the more important document.