Articles of Association, the second important document of a company, contain rules, regulations and bye-laws for the internal administration of the company. The articles regulate the internal management of the company.
Articles define the powers of the directors and other officers of the company. Articles also govern the relationship between the company and its constituent members by prescribing the rights and obligations of the members of the company. Section 2(2) of the Companies Act defines articles of association as follows:
“Articles mean the articles of association as originally framed or as altered from time to time in pursuance of any previous company’s law or of this Act.”
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According to section 26 of the Companies Act, the following companies must file their own articles along with the Memorandum of Association for registration:
(i) Private limited Companies
(ii) Companies limited by Guarantee
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(iii) Unlimited Companies.
The Articles of Association of a private company must contain the prescribed restrictions. The Articles of guarantee company should state the number of members with which the company is to be registered and the articles of an unlimited company should state both the number of members as well as the amount of share capital (if any) with which the company is to be registered.
A public company limited by share capital may either have its own articles or may adopt Table A (as given in Schedule I) which contains a model set of Articles. In case such a company does not file its own articles, it is presumed that it has adopted Table A as its Articles.
Further, in case of company limited by shares if its articles are silent on any point, the regulations of Table A would apply unless the company has declared in its articles that Table A shall not apply. [Sec. 28 (2)]