Complete Procedure for the alteration in AOA of a Company

The articles of association of a company are its by-laws or rules and regulations which govern the management of its internal affairs and the conduct of its business. They are framed with the object of carrying out the aims and objects as set out in the Memorandum of Association. Further, the AOA or Articles of Association creates a balance between the objectives and Mission of a company.

In this blog, we will discuss the concept of Alteration of Articles of Association and its effect on the company.

Concept of Articles of Association

The term Articles of Association or AOA is parallel to a Rule Book within a Company. This Legal Document includes all the details and information that are significant to govern and regulate the Internal Management of the company.

Further, the details included under the AOA are as follows:

• Shares;
• Details regarding the manner of holding different meetings;
• Role and Powers of the Directors;

Moreover, the definition of “Articles of Association” is provided under section 2(5) of the Companies Act 2013. As per this definition, an AOA comprises of all the rules, regulations, details, and particulars that govern the policies of a company.

Also, every company, whether it is a Private Limited Company, One Person Company, or a Public Limited Company  must have a duly drafted AOA (Articles of Association) and MOA (Memorandum of Association) for them.

Why does a company need to have AOA?

Both AOA and MOA is mandatory before and after the Incorporation of a company. The most essential thing while incorporating a company is the documentation of the MOA and AOA. Without the documentation of MOA and AOA, a company can not be registered. AOA is mainly drafted for the benefit of the Company and also for all the employees who are directly as well indirectly associated with it.

What are the different kinds of AOA?

According to the Companies Act, 2013, the Company can adopt any one of these as their AOA.

• Table F:    Articles of Association of a Company Limited by Shares;
• Table G:   Articles of Association of a Company Limited by Guarantee and is having Share Capital;
• Table H:   Articles of Association of a Company Limited by Guarantee but not having Share Capital;
• Table I:     Articles of Association of an Unlimited Company which is having a Share Capital;
• Table J:    Articles of Association of an Unlimited Company which is not having a Share Capital;

What information does AOA contain?

Article of Association contains the bye-laws of the Company. Such as,

• Share Capital which includes subdivision of share capital; calls on shares, shares transfer, and shares conversion into stock, a surrender of shares.
• Qualification, appointment, remuneration, powers, and proceedings of the Directors. It also includes the proceedings of shareholders’ general meetings.
• Shareholders are voting rights either by poll or proxy and proceeding of shareholders’ general meetings.

Alteration of AOA

Any Company which intended to make any change to the Article of Association (AOA) of its company, will have to comply with the provisions of Section- 14 of Companies Act, 2013 and any other applicable provisions of the Act and applicable rules. Company can alter its Article by way of addition, deletion, modification, substitution, or in any other way, only if it wants. Note: * Every alteration made in the articles of a company shall be noted in every copy of the memorandum or articles, as the case may be.

In accordance with Section 14 of the Companies Act, 2013, a company may alter its articles mentioned in its AOA by passing a special resolution. The alteration done in the AOA of a company must be filed with the Registrar with a printed copy of the articles within 15 days.

The AOA can be altered in the following ways –

• By adopting a new set of articles.
• By adding or inserting any new article.
• By deleting any article.
• By amending or substituting any specific rule.

 Procedure for the alteration in AOA

There are specific steps that needed to be followed for altering the AOA of a company –

• Firstly, hold a Board meeting and find that particular article that needs alteration. The alteration does not mean only altering the existing articles. It may also include the addition or deletion of any articles. After that, a formal resolution is passed for this.
• Any changes in the Articles of the AOA need to comply with the provisions of Companies Act, and the conditions contained in the MOA of the Company. You need to check that any such changes do not increase the liability or expulsion of any member after the alteration.
• A time, date, and venue are fixed for the general meeting to fix the resolution.
• A Company Secretary is authorized to issue the notice of the general meeting.
• Thereafter, if the shares of your Company are enlisted with any recognized stock exchange, then forward copies of all notices to the shareholders about the changes in the AOA to the Sock exchange.
• Form MGT-14 is filed with the ROC (Registrar of Companies).
• At last, you can make necessary changes in all the copies of the AOA.

Effects of the Alteration of AOA

The effects of the alteration of articles of association are as follows:

• Alteration of Articles of Association bound the member with the company;
• Altered AOA will govern the Internal Management, Business, and Administration of the Company

Takeaway

The Articles of a company acts as a rule book for the company. It not only defines the rights and duties of the directors but provides various means through which the shareholder can exercise control over directors and the company as well. 

Further, the Alteration of Articles of Association denotes a process of modifying or altering the by-laws, rules, and regulations that govern or regulate the Internal Management of a company.

In case of any confusion, reach out to Legal Window, our experts will not only provide the clear and lucid learning of the concept but will guide you through the process of the alteration as well.