Articles of Association explained: this guide covers what Articles of Association means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
What Are the Articles of Association?
If the Memorandum of Association is a company's passport (telling the world who it is), the Articles of Association (AOA) is the company's rulebook (telling everyone inside the company how things should be done). The AOA contains the internal rules, regulations, and bye-laws for the day-to-day management of the company.
Section 5 of the Companies Act 2013 governs the Articles of Association. Every company must have Articles, either by drafting its own or by adopting the model Articles provided in Schedule I of the Act.
"The articles of a company shall contain the regulations for management of the company."
-- Section 5(1), Companies Act 2013
What Does the AOA Typically Contain?
While the Companies Act does not prescribe mandatory clauses for the AOA (unlike the MOA which has 6 mandatory clauses), the AOA typically covers:
| Area | Matters Covered |
|---|---|
| Share Capital | Classes of shares, rights attached, share certificates, calls on shares, forfeiture, lien |
| Transfer of Shares | Procedure for transfer, Board's power to refuse transfer (in private companies), transmission on death |
| Directors | Number of directors, appointment, removal, powers, remuneration, vacation of office |
| Board Meetings | Notice period, quorum, chairperson, voting, minutes |
| General Meetings | AGM and EGM procedures, proxy rules, poll, postal ballot |
| Dividends | Declaration, interim dividend, unclaimed dividend, dividend warrant |
| Accounts | Books of accounts, financial statements, audit |
| Borrowing Powers | Board's authority to borrow, limits, creation of charges |
| Common Seal | Custody, use, authentication (now optional after 2015 amendment) |
| Winding Up | Provisions for voluntary winding up, distribution of surplus |
| Indemnity | Indemnification of directors and officers for acts done in good faith |
Model Articles in Schedule I
Schedule I of the Companies Act 2013 provides model Articles for different types of companies:
| Table | Applicable To | When Used |
|---|---|---|
| Table F | Company limited by shares | Applies automatically if company does not register its own AOA |
| Table G | Company limited by guarantee and having share capital | Must be adopted specifically |
| Table H | Company limited by guarantee without share capital | For Section 8 companies |
| Table I | Unlimited company with share capital | Rare in practice |
| Table J | Unlimited company without share capital | Very rare |
Who Is Bound by the Articles?
Section 10 states that the MOA and AOA, when registered, bind the company and its members as if they had been signed by each member. This means:
- The company is bound to follow its own Articles
- Every member is bound to the company and to other members
- The Articles create a contract between the company and its members, and between members themselves
- However, the Articles do NOT create a contract between the company and third parties (outsiders)
Example: If the AOA says "no member can transfer shares without first offering them to existing members" (right of first refusal), then a member who sells shares directly to an outsider without offering them to other members has violated the AOA. The other members can challenge this transfer.
How to Alter the Articles
Section 14 governs alteration of the AOA:
- A company may alter its Articles by passing a Special Resolution (75% majority of votes cast)
- File Form MGT-14 with the ROC within 30 days of passing the resolution
- The alteration must not be inconsistent with the Companies Act or the MOA
- For converting a private company to public company or vice versa, the AOA must be altered along with the MOA
"Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by special resolution, alter its articles..."
-- Section 14(1), Companies Act 2013
AOA vs Shareholder Agreement -- Which Prevails?
This is a frequently asked question in startup law. Many companies have both Articles of Association AND a separate Shareholders Agreement (SHA). If there is a conflict between the two:
- The AOA prevails in matters of company law compliance (meetings, filings, share transfers)
- The SHA prevails as a private contract between the parties for commercial terms (valuation, exit rights, non-compete)
- Best practice: Keep both documents consistent. When entering into a SHA, simultaneously alter the AOA to reflect key SHA provisions
Penalties
| Violation | Penalty |
|---|---|
| Not registering AOA with MOA | ROC will refuse incorporation |
| Acting contrary to AOA | Aggrieved members can seek injunction from NCLT |
| Not filing altered AOA within 30 days | Rs. 100/day delay; Rs. 25,000 for officer in default |
| Not providing AOA copy to members on request | Rs. 1,000 for each default (Section 17) |