Articles of Association

Section 2(2) of the Companies Act defines Articles; Articles mean Articles of Association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act, including so far as they apply to the company, the regulations contained as the case may be in Table A to schedule I of this act.

Section 26 inter alia unlimited provides that there may, in 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. Public company limited by shares may or may not have Articles of Association.

The Articles of Association prescribe regulations of the company. Articles are subordinate to Memorandum of Association and are under full control of the members. Articles of Association can be altered at any time according to the wishes of the members. As stated above, Memorandum of Association defines the limits and the framework beyond which the company cannot go. Members can within the framework make their regulations through Articles of Association subject to the Companies Act.

Form of contents of Articles

The Articles contain rules and regulations for the internal management of the company subject to the provisions of the Companies Act. Table A of schedule I to the Act gives the proforma form of Articles. Any stipulation as to the relations between the company and its members and between members interse may be inserted in the articles. The provisions in the articles must not however conflict with the provisions of the Companies Act.

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 share capital, the amount of share capital with which the company is to be registered. 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. In the case of private limited company having share capital the articles shall contain the provisions relating to the following matters as provided in section 3 (1) (iii) of the Act:

1. restricting the right to transfer shares, if any;
2. limiting the numbers of its members to 50 not including
a) persons who are in the employment of the company and
b) persons who having been formerly in the employment of the company were members of that company while in that employment and have continued to be members after the employment ceased; and
3) Prohibiting any invitation to the public to subscribe for any shares or debentures of the company .

4) Prohibiting any invitation or acceptance of deposits from persons other than its members directors or their relatives.

In case of any other private company, the Articles shall contain the provision listed in items (ii) and (iii) above Sec 27. The Articles of Association of the company limited by shares may adopt all or any of the regulations contained in table A in Schedule I Sec 28. 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 there to as circumstances admit Sec 29. Nothing shall prevent a company not being a company limited by shares from including any additional matters in its articles in so far 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.

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