Articles AOA Change

The Articles regulate the internal management of the company. They define the powers of its officers.

Articles usually contain provisions relating to the following matters- 1. Share capital including sub division thereof, rights of various shareholders, the relationship of these rights, payment of commission, share certificates, 2. Lien of shares 3. Calls on shares 4. Transfer of shares 5. Transmission of shares 6. Forfeiture of shares 7. Surrender of shares 8. Conversion of shares into stock 9. Share warrant 10. Alteration of capital 11. General meetings and proceedings thereat 12. Voting rights of members, voting by poll, proxies 13. Directors, including first directors or directors for life, their appointment, remuneration, qualifications, powers and proceedings of Board of directors’ mee

1. Unlimited companies 2. Companies limited by guarantee 3. Private companies limited by shares

According to section 28(1), company limited by shares may either frame its own set of articles or may adopt all of any of the regulations contained in Table A. but if it does not register any Articles, Table A applies, if it does not have some regulations, for the rest, as far as applicable, table A applies, insofar as its regulations are not excluded [(section 28(2)]. Thus, in case of a limited liability company having share capital, if the articles do not expressly exclude any or all provisions of table A, and at the same time not providing anything for them, applicable clauses of Table A shall automatically apply to it.

Merely because in articles of association, the board of directors is empowered to refer any claim or demand to arbitration, provisions of section 36 cannot be interpreted to mean that the company or its directors shall be bound to incorporate a provision for arbitration in every agreement that a company executes- Skypark builders & distributors Vs Kerala Police housing & construction Corpn Ltd. [2004] 50 SCL 254.

Each member must observe the provisions of articles and memorandum. For instance, a company has a right of lien on member’s shares or to forfeit the shares on non-payment of calls. Every member is bound by whatever is contained in the memorandum and articles. In Borland’s Trustee vs steel Bros. Co. Ltd [1901] 1 Ch. 279, the articles of a company contained a clause that on the bankruptcy of a member, his share should be sold to the other persons and at a fixed price by the directors. ‘B’ a shareholder was adjudicated bankrupt. His trustee in bankruptcy claimed that he was not bound by these provisions and should be at liberty to sell the shares at the true value. It was held that the trustee

A company is bound to its members by whatever is contained in its articles and memorandum. The company is bound not only to the “members as a body” but also to the individual members as to their individual rights. The members can restrain the company from spending money on ultra vires transaction. An individual can make the company fulfil its obligation to him such as to send the notice for the meetings, to allow him to cast his vote in the meeting.