AOA of Company Law

1. ARTICLES OF
ASSOCIATION
Mr.SACHIN JINDAL
Assistant Professor,MGMT

2. • 1) Articles of Association of a company contain the rules
and Regulations relating to the Management of its internal
Affairs.
• 2) It defines the rights, powers and duties of the
Management.
• 3) It must not contain anything which is against the
memorandum of association or against the companies Act
or Public policy.
• 4) A public company limited by shares may Register its
own Articles of Association or it may adopt Table A .
• 5) A company limited by Guarantee with out having share
capital may file its own Articles or may adopt Table C.
• 6) The Articles of Association must be printed, divided
into paragraphs, numbered consecutively and signed by
each signatory to the MOA in the presence of at least one
attesting witness.

3. The articles of a company must
contain the following
restrictions.
• Restrict the right to transfer shares.
• Limit the number of members to fifty.
• Prohibit any invitation to the public to
subscribe for any shares in, or debentures
of, the Company.

4. Contents in the Articles of
Association
• Adoption of preliminary contracts.
• Number and value of shares
• Allotment of shares
• Calls on shares
• Transfer of shares
• Forfeiture,reissue,surrender of shares
• Alteration of share capital
• Share certificates
• Conversion of shares in to stocks
• Meetings and proceedings
• Voting rights , proxies and polls
• Appointment , Remmunaration,etc of Directors
• Borrowing powers
• Dividend and Reserves
• Accounts and audit
• Procedure of winding up
• Seal of the company

5. Differentiate between MOA&AOA
POINTS MOA AOA
Nature Charter of the
company
Internal rules and
regulation
contents Objects and
powers of the
company
Bye-laws for carrying
out the companies
objects
Relations defined Relations b/w
company and with
outside world.
Relations with
company and its
members
status Supreme document Subordinate to the
MOA
FILLING Must file Adopt Table A
Alteration Strict restriction Altered by resolution
Legal effects Cannot ratified Ratified

6. Prospectus
• A prospectus is thus any document which invites the public
to provide funds to the company bye law of deposits or
subscriptions to its shares and debentures.
• It is a valuable document containing important details about
a company
• It should be duly signed by the company.

7. Importance of Prospectus
• It is an invitation to the public to subscribe to the shares and
debentures of the company.
• It informs public about the company and stimulates people to
invest money in the company.
• It provides an authentic record of the terms and conditions on
which shares and debentures have been issued.
• It identifies the persons who can be held responsible for any
untrue or incorrect statements made in it.
• It reflects the business policies and programmes of the company.
• It helps the investors to take investment decisions.

8. Contents of the prospectus
• Name of the company
• Address of the Registered office.
• Nature and objects of business
• Capital structure
• History of the company
• Particulars about Underwriters,auditors,brokers,bankers
• Date of opening and closing subscription list
• Name of stock exchanges where applications for listing
has been made.
• Information about material contracts with managerial
personnel
• Outstanding liabilities
• Financial information.
• Consent of managerial personnel
• Management perception of risk factors.
• Statutory or other information.

9. Types of prospectus
• Shelf prospectus: It is a prospectus issued by
public financial institutions like public sector bank
and scheduled bank
• Red -herring Prospectus: It means a prospectus
which does not contain full particulars on price of
the securities offered and their number. It is
issued by companies which raise capital through
the book building process.

10. Statement in lieu of
prospectus
• A public company issue this to the
Registrar of Companies all east three
days before the allotment of shares.

11. Minimum subscription
• Minimum amt of money from the proposed issue of shares
• If the minimum subscription is not received within 120 days
of the issue of prospectus, the amt received on applications
must be refunded to the applicants within 10 days.

12. Minimum subscription
cover following expenses
• Preliminary expenses
• Underwriting commission
• Working capital
• The cost of any property; purchased or to
be purchased.
• Payment of any money borrowed for the
above purpose
• Any other necessary expendeture

13. Scanning a prospectus from the view point of
an investor
Nature of
business
Prospective investor should examine the condition
of industry, demand and supply etc…
Objects Success and prospects of a company depend on its
objects
management The standing of the promoters and directors
should be judged
Capital
structure
Minimum subscription ,securities, rights etc…
Property
acquired
The amt paid or proposed to be paid for goodwill
and other properties should be carefully
scrutinized.
Past history Investor checked history of companies especially
existing business liability & assets.
Material
contracts
Details of contracts must mentioned in prospectus
Business
associates&
restrictions
Associated organizations and its reputation and
restrictions in AOA.