- As per section 7(1) of the Companies Act, 2013, every type of company whether public or private and whether limited by shares or limited by guarantee having a share capital or not having a share capital or an unlimited liability company must register their articles of association.
- Section 5(2) provides that the articles shall also contain such matters, as prescribed in Rule 11 of the Companies (Incorporation) Rules, 2014.
- The articles of a private company must contain the three restrictions as contained in Section 2(68).
- The articles must be :
- printed, divided into paragraphs, numbered consecutively, stamped adequately.
- signed by each subscriber to the memorandum and duly witnessed and filed along with the memorandum.
- The articles must not contain anything illegal or ultra vires the memorandum, nor should it be contrary to the provisions of the Companies Act 2013.
Forms and Schedule related to Article of Association
As per section 5(6) of Companies Act, 2013 The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company.
A company shall adopt any of the model Forms of the article of association mentioned above, as may be applicable to it.
Manner of Altering Article of Association
A Company may alter its Articles in accordance with the above provisions in any of the following manner -
(a) by adoption of new set of articles;
(b) by addition/insertion of a new Clause/s;
(c) by deletion of a Clause/s ;
(d) by amendment of a specific Clause/s ;
(e) by substitution of a specific Clause/s.
Procedure For Alteration In Article of Association
Step - 1 : Issue notice of board meeting to all the directors least 7 days before the date of Board Meeting under Sec. 173 and SS-1.
Step - 2 : Call and hold board meeting and
- Pass Board Resolution
- Delegate authority to any one director of the company to sign, certify and file the requisite forms with ROC.
- Fix day, date, time and venue for holding the general meeting of the Company for passing a special resolution .
- Authorize the Director or Company Secretary to sign and issue notice of the general meeting.
Step - 3 : Issue notice of General Meeting least 21 days before the actual date of General Meeting all shareholders under section 101 of Companies Act, 2013 and SS-2.
Step - 4 : Call and hold General Meeting for change in Articles of company and pass Special Resolution.
Step - 5 : File MGT -14 within 30 days with ROC from conclusion of General Meeting.
- Certified copy of Special Resolution,
- Minutes of General Meeting,
- Altered AOA.
Step - 6 : Make necessary changes in Articles of association.
Limitations To Alter In Article of Association
- The alteration must not exceed the powers given by the memorandum. In the event of conflict between the memorandum and the articles, it is the memorandum that will prevail.
- The alteration must not be inconsistent with any provisions of the Companies Act or any other statute.
- The Articles must not include anything which is illegal or opposed to public policy.
- The alteration must be bona fide for the benefit of the company as a whole.
- Articles cannot be altered so as to compel an existing member to take or subscribe for more shares or in any way increase his liability to contribute to the share capital, unless he gives his consent in writing
- By effecting alteration in its articles, a company cannot defeat escape from its contractual obligation with any person. The company will always be liable in such a case.
- The Articles of Association cannot be altered so as to have retrospective effects. The articles only operate from the date of the amendment.
- The alteration must not be inconsistent with an order of the Court under Sections 397 or 398 and 404 of the Companies Act, 1956.
- The alteration must not constitute a fraud on the minority by a majority.