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Articles of Asso

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It is an official document governing the running of a company that is placed with the Registrar of Companies. The articles of association constitute a contract between the company and its members, set out the voting rights of stockholders and the conduct of stockholders' and directors' meetings, and detail the powers of management of the company. A memorandum of association is a related document.
The Articles of Association contain, as per the law requires, provisions on the company name, address and domicile, the purpose of the company, the amount of share capital and the contributions made thereto, the number, the par value and the type of shares, the calling of a general meeting of shareholders and the voting rights of them, the bodies for the administration and the audit, and the form in which the company shall publish notices. The Articles of Association (AA) contain the rules and regulations of the internal management of the company. The AA is nothing but a contract between the company and its members and also between the members themselves that they shall abide by the rules and regulations of internal management of the company specified in the AA. It specifies the rights and duties of the members and directors.
Articles of association are simply the basic internal rules of operation for a business or non-profit organization that govern what tasks need to be done, what positions are required to perform the necessary functions, and how the processes in place are to be performed.
Often articles of association deal with such operating issues as the calling of general meetings, the process for appointing and selecting directors and managers within the organizational structure, etc. Articles of association also address how the company will go about issuing shares of stock, paying dividends to investors, and how and when audits on the financial records will be conducted.
The provisions of the AA must not be in conflict with the provisions of the MA. In case such a conflict arises, the MA will prevail.
Normally, every company has its own AA. However, if a company does not have its own AA, the model AA specified in Schedule I - Table A will apply. A company may adopt any of the model forms of AA, with or without modifications. The articles of association should be in any of the one form specified in the tables B, C, D and E of Schedule 1 to the Companies Act, 1956. Form in Table B is applicable in case of companies limited by the shares, form in Table C is applicable to the companies limited by guarantee and not having share capital, and form in Table D is applicable to company limited by guarantee and having a share capital whereas form in table E is applicable to unlimited companies. However, a private company must have its own AA.
The important items covered by the AA include:-
1. Powers, duties, rights and liabilities of Directors
2. Powers, duties, rights and liabilities of members
3. Rules for Meetings of the Company
4. Dividends
5. Borrowing powers of the company
6. Calls on shares
7. Transfer & transmission of shares
8. Forfeiture of shares
9. Voting powers of members.
Some others are: * the issuing of shares (also called stock), different voting rights attached to different classes of shares * valuation of intellectual rights, say, the valuations of the IPR of one partner and, in a similar way as how we value real estate of another partner * the appointments of directors - which shows whether a shareholder dominates or shares equality with all contributors * directors meetings - the quorum and percentage of vote * management decisions - whether the board manages or a founder * transferability of shares - assignment rights of the founders or other members of the company do * special voting rights of a Chairman, and his/her mode of election * the dividend policy - a percentage of profits to be declared when there is profit or otherwise * winding up - the conditions, notice to members * confidentiality of know-how and the founders' agreement and penalties for disclosure * ------------------------------------------------- first right of refusal - purchase rights and counter-bid by a founder.

26. ARTICLES PRESCRIBING REGULATIONS
There may in the case of a public company limited by shares, and there shall in the case of an unlimited company or a company limited by guarantee or a private company limited by shares, be registered with the memorandum, articles of association signed by the subscribers of the memorandum, prescribing regulations for the company.
27. REGULATIONS REQUIRED IN CASE OF UNLIMITED COMPANY, COMPANY LIMITED BY GUARANTEE OR
PRIVATE COMPANY LIMITED BY SHARES
(1) In the case of an unlimited company, the articles shall state the number of members with which the company is to be registered and, if the company has a share capital, the amount of share capital with which the company is to be registered. (2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company is to be registered.
(3) In the case of a private company having a share capital, the articles shall contain provisions relating to the matters specified in sub-clauses (a), (b) and (c) of clause (iii) of sub-section (1) of section 3 ; and in the case of any other private company, the articles shall contain provisions relating to the matters specified in the said sub-clauses (b) and
(c).
28. ADOPTION AND APPLICATION OF TABLE A IN THE CASE OF COMPANIES LIMITED BY SHARES
(1) The articles of association of a company limited by shares may adopt all or any of the regulations contained in
Table A in Schedule I.
(2) In the case of any such company which is registered after the commencement of this Act, if articles are not registered, or if articles are registered, insofar as the articles do not exclude or modify the regulations contained in
Table A aforesaid, those regulations shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.
29. FORM OF ARTICLES IN THE CASE OF OTHER COMPANIES
The articles of association of any company, not being a company limited by shares, shall be in such one of the forms in Tables C, D and E in Schedule I as may be applicable, or in a form as near thereto as circumstances admit :
Provided that nothing in this section shall be deemed to prevent a company from including any additional matters in its articles insofar as they are not inconsistent with the provisions contained in the form in any of the Tables C, D and
E, adopted by the company.
30. FORM AND SIGNATURE OF ARTICLES
Articles shall-
(a) be printed ;
(b) be divided into paragraphs numbered consecutively ; and
(c) be signed by each subscriber of the memorandum of association
(who shall add his address, description and occupation, if any,) in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation, if any.
31. ALTERATION OF ARTICLES BY SPECIAL RESOLUTION
(1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may, by special resolution, alter its articles : Provided that no alteration made in the articles under this sub-section which has the effect of converting a public company into a private company, shall have effect unless such alteration has been approved by the Central Government.
(2) Any alteration so made shall, subject to the provisions of this Act, be as valid as if originally contained in the articles and be subject in like manner to alteration by special resolution.
(2A) Where any alteration such as is referred to in the proviso to sub-section (1) has been approved by the Central Government, a printed copy of the articles as altered shall be filed by the company with the Registrar within one month of the date of receipt of the order of approval.
(3) The power of altering articles under this section shall, in the case of any company formed and registered under Act No. 19 of 1857 and Act No. 7 of 1860 or either of them, extend to altering any provisions in Table B annexed to Act No. 19 of 1857, and shall also, in the case of an unlimited company formed and registered under the said Acts or either of them, extend to altering any regulations relating to the amount of capital or its distribution into shares, notwithstanding that those regulations are contained in the memorandum.
581G. ARTICLES OF ASSOCIATION
(1) There shall be presented, for registration to the Registrar of the State to which the registered office of the Producer Company is, stated by the memorandum of association, to be situate : -
(a) memorandum of the Producer Company ;
(b) its articles duly signed by the subscribers to the memorandum.
(2) The articles shall contain the following mutual assistance principles, namely : -
(a) the membership shall be voluntary and available, to all eligible persons who, can participate or avail of the facilities or services of the Producer Company, and are willing to accept the duties of membership ;
(b) each Member shall, save as otherwise provided in this Part, have only a single vote irrespective of the share holding ;
(c) the Producer Company shall be administered by a Board consisting of persons elected or appointed as directors in the manner consis-tent with the provisions of this Part and the Board shall be accountable to the Members;
(d) save as provided in this Part, there shall be limited return on share capital ;
(e) the surplus arising out of the operations of the Producer Company shall be distributed in an equitable manner by : -
(i) providing for the development of the business of the Producer Company ;
(ii) providing for common facilities ; and
(iii) distributing amongst the Members, as may be admissible in proportion to their respective participation in the business ;
(f) provision shall be made for the education of Members, employees and others, on the principles of mutuality and techniques of mutual assistance ;
(g) the Producer Company shall actively co-operate with other Producer Companies (and other organisations followingsimilar principles) at local, national or international level so as to best serve the interest of their Members and the communities it purports to serve.
(3) Without prejudice to the generality of the foregoing provisions of sub-sections (1) and (2), the articles shall contain the following provisions, namely : -
(a) the qualifications for membership, the conditions for continuance or cancellation of membership and the terms,conditions and procedure for transfer of shares ;
(b) the manner of ascertaining the patronage and voting right based on patronage ;
(c) subject to the provisions contained in sub-section (1) of section 581N, the manner of constitution of the Board, its powers and duties, the minimum and maximum number of directors, manner of election and appointment of directors and retirement by rotation, qualifications for being elected or continuance as such and the terms of office of the said directors, their powers and duties, conditions for election or co-option of directors, method of removal of directors and the filling up of vacancies on the Board, and the manner and the terms of appointment of the Chief Executive ;
(d) the election of the Chairman, term of office of directors and the Chairman, manner of voting at the general or special meetings of Members, procedure for voting, by directors at meetings of the Board, powers of the Chairman and the circumstances under which the Chairman may exercise a casting vote ;
(e) the circumstances under which, and the manner in which, the withheld price is to be determined and distributed ;
(f) the manner of disbursement of patronage bonus in cash or by issue of equity shares, or both ;
(g) the contribution to be shared and related matters referred to in subsection (2) of section 581ZI ;
(h) the matters relating to issue of bonus shares out of general reserves as set out in section 581ZJ ;
(i) the basis and manner of allotment of equity shares of the Producer Company in lieu of the whole or part of the sale proceeds of produce or products supplied by the Members ;
(j) the amount of reserves, sources from which funds may be raised, limitation on raising of funds, restriction on the use of such funds and the extent of debt that may be contracted and the conditions thereof ;
(k) the credit, loans or advances which may be granted to a Member and the conditions for the grant of the same ;
(l) the right of any Member to obtain information relating to general business of the company ;
(m) the basis and manner of distribution and disposal of funds available after meeting liabilities in the event of dissolution or liquidation of the Producer Company ;
(n) the authorisation for division, amalgamation, merger, creation of subsidiaries and the entering into joint ventures and other matters connected therewith ;
(o) laying of the memorandum and articles of the Producer Company before a special general meeting to be held within ninety days of its registration ;
-------------------------------------------------
(p) any other provision, which the Members may, by special resolution recommend to be included in articles.

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