Sample Articles of Association

SAMPLE
ARTICLES OF
ASSOCIATION
SV.CO Financial Documents Repository

(THE COMPANIES ACT, 1956)
(COMPANY LIMITED BY SHARES)
A R T I C L E S O F A S S O C I A T I O N
OF
ABCD PRIVATE LIMITED
PRELIMIN ARY
1. Subject as hereinafter provided the Regulations contained in Table 'A' in the First
Schedule to the Companies Act, 1956 shall apply to the Company.
INTERPRETATION
2. (1) In these Regulations :-
(a) "Company" means XX
(b) "Office" means the Registered Office of the Company.
(c) "Act" means the Companies Act, 1956, and any statutory modification
thereof.
(d) "Seal" means the Common Seal of the Company.
(e) "Directors" means the Directors of the Company and includes persons
occupying the position of the Directors by whether names called.
(2) Unless the context otherwise requires words or expressions contained in these
Articles shall be the same meaning as in the Act, or any statutory modification thereof
in force at the date at which these Articles become binding on the Company.
PRIVATE COMPANY
3. The Company is a Private Company within the meaning of Section 3(1) (iii) and 2(35) of the
Companies Act, 1956 and accordingly: -
(a) The right to transfer shares in the Company is restricted in the manner and to the
extent hereinafter appearing
(b) The number of members of the Company (exclusive of persons who are in the
employment of the Company, and persons who having been formerly in the
employment of the Company, were members of the Company while in the
employment and have continued to be members after the employment ceased)
shall be limited to fifty; provided that for the purpose of this definition where two or
more persons jointly hold one or more shares in the Company, the shall, be
treated as a single member, and.
(c) No invitation shall be issued to the public or subscribe for any shares in or
debentures of the Company.
(d) Prohibits any invitation or acceptance of deposits from persons other than its
members, directors and relatives.
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SHARE CAPITAL
4. (a) The Authorized Share Capital of the Company shall be such amounts and be
divided into such shares as may, from time to time, be provided in Clause V of
the Memorandum of Association with power to increase or reduce the capital in
accordance with the Company’s regulations and legislative provisions for the time
being in force in that behalf with the powers to divide the share capital, whether
original increased or decreased into several classes and attach thereto
respectively such ordinary, preferential or special rights and conditions in such a
manner as may for the time being be provided by the Regulations of the
Company and allowed by law.
(b) The minimum paid up Capital of the Company shall be Rs. 1,00,000/-(Rupees
One Lac).
5. The business of the Company may be commenced soon after the incorporation of the
Company as and when the Directors shall think fit notwithstanding that part of the shares
have been allotted.
6. The shares shall be under the discretionary control of the Directors who may allot or
otherwise dispose of the same.
7. The Company in general meeting may decide to issue fully paid up bonus share to the
member if so recommended by the Board of Directors.
8. The certificate to share registered in the name of two or more person shall be delivered to
first named person in the register and this shall be a sufficient delivery to all such holders.
LIEN
9. The Company shall have a first and paramount lien upon all the shares (not being a fully
paid up share) registered in the name of such member (whether solely or jointly with
others) and upon the proceeds of sale thereof for his debts, liabilities and engagements
(whether presently payable or not) solely or jointly with any other person, to or with the
Company, whether the period for the payment, fulfillment or discharge thereof shall have
actually allien or not and such lien shall extend to all dividends, from time to time,
declared in respect of shares, subject to section 205 A of the Act. The Board of Directors
may at any time declare any shares to be wholly or in part exempt from the provisions of
this clause.
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CALLS ON SHARES AND TRANSFER OF SHARES
10. The Directors are empowered to make call on members of any amount payable at a time
fixed by them.
11. Any member desiring to sell any of his shares must notify the Board of Directors of the
number of shares, the fair value and the name of the proposed transferee and the Board
must offer to the other share holders the shares offered at the fair value and if the offer is
accepted, the shares shall be transferred to the acceptor and if the shares or any of
them, are not so accepted within one month from the date of notice to the Board the
members proposing transfers shall, at any time within three months afterwards, be at
liberty, subject to Articles 12 and 13 hereof, to sell and transfer the shares to any persons
at the same or at higher price.
In case of any dispute, regarding the fair value of the share it shall be decided and fixed
by the Company’s Auditor whose decision shall be final.
12. No transfer of shares shall be made or registered without the previous sanction of the
Directors, expect when the transfer is made by any member of the Company to another
member or to a member’s wife or child or children or his heirs and the Directors may
decline to give such sanction without assigning any reason subject to Section 111 of the
Act.
13. The Directors may refuse to register any transfer of shares (1) where the Company has a
lien on the shares or (2) where the shares are not fully paid up shares, subject to Section
111 of the Companies Act, 1956.
14. Subject to Section 111 of the Act, the Directors may in their discretion, without assigning
any reason, refuse to register the transfer of any shares to any person, whom it shall, in
their opinion, be undesirable in the interest of the Company to admit to membership.
15. At the death of any members his or her shares be recognized as the property of his or
her heirs upon production of reasonable evidence as may required by the Board of
Directors.
16. The instrument of transfer must be accompanied by the certificates of shares.
GENERAL MEETINGS
17. All General Meetings other than the Annual General Meeting shall be called Extra-
ordinary General Meetings.
18. (a) The Board may whenever it thinks fit, call an Extra-ordinary General Meetings.
(b) If at any time there are not within India directors capable of acting who are
sufficient in number to form a quorum, any Director or at least any two members
of the Company may call an Extra-ordinary General Meeting in the same manner,
as nearly as possible, as that a meeting may be called by the Board.
19. At least twenty-one days, clear notice of General Meetings of the Company, specifying
the day, hour and place of meeting and the objects shall be given. In every such notice
calling meeting of the Company there will appear a statement that member is entitled
to appoint proxy to attend and to vote instead of himself. A General Meeting may be
called after giving a notice shorter than twenty-one days if consent is accorded in case of
any general meeting of all the members entitled to vote there at and in case of any other
meeting by members holding not less than 95 (Ninety Five) present of the paid up share
capital and is given a right to vote a meeting.
20. No business shall be transacted at any general meeting, unless quorum of members in
present. At least two members present in person shall be quorum for general meeting.
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21. The Chairman, if any, of the Board, shall preside as Chairman of all Board and general
meetings, of the Company. If at any time the Chairman is not present within 15 minutes
after the time appointed for holding the same, the Directors and members present shall
elect one of the Directors present to be Chairman of such meeting. If no directors is present
or unwilling to act as Chairman, the members may appoint one of their members as
Chairman.
DIRECTORS
22. The number of Directors shall not be less than two and not more than twelve.
23. The following shall be the First Directors of the Company.
1.
2.
24. The Directors may from time to time, appoint one or more of their body to the office of the
Managing Director for one or more of the divisions of the business carried on by the
Company and to enter into agreement with him in such terms and conditions as they may
deem fit.
25. The Directors shall have the power, at any time and from time to time, to appoint any
person as additional Director in addition to the existing Director so that the total number of
Directors shall not at any time exceed the number fixed for Directors in these articles, Any
Directors so appointed shall hold office only until the next following Annual General Meeting
but shall be eligible thereof for election as Director.
26. The Managing Director may be paid such remuneration as may, from time to time, be
determined by the Board and such remuneration as may be fixed by way of salary or
commission or participation in profits or partly in one way or partly in another subject to the
provisions of the Companies Act, 1956.
27. The quorum necessary for the transaction, of the business of the Board meeting subject to
Section 287 of the Act, shall be one third of the total strength or at least two whichever is
higher.
28. Subject to section 289 of the Act, a resolution in writing signed by the Director except a
resolution which the Act specifically required it to be passed at a Board meeting shall be
effective for all purposes as a resolution passed at a meeting of Directors duly called, held
and constituted.
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29. Subject to provisions of Section 313 of the Act, a Director, who may be absent for a
period, not less than 3 (three) months from the State in which the meeting of the Board
are ordinerly held, have power to appoint any member of the Company elected by him as
an alternate director by giving notice in writing under his name to the Board and at his
discretion to remove, such alternate director. Such alternate Director shall vacate office
when his appointee is present in person or cease to be director. Save as aforesaid such
alternate director while so acting shall exercise and discharge all functions and powers
and be subject to all the duties and limitations of the Director which he represents and
shall be entitled to receive notice to attend and to vote a Director’s Meeting on behalf of
meeting attended by him.
30. The Director shall have power for engagement and dismissal of managers, engineers,
assistants, clerks and others and shall have power of general direction, and management
and suprintendence, of the business of the company with full powers to do all such acts,
matters and things deemed necessary, proper or expedient for carrying on the business
and concern of the Company including the power to make such investment of the
Company’s fund as they shall think fit, subject to the limit fixed by the Board of Directors
under Section 292 of the Act and sign contracts and to draw, make. sign, accept, endorse
and negotiate on behalf of the Company all bills of exchange, promissory notes, hundies
drafts, Government Promissory Notes and other Government securities and such other
instruments.
31. The Director may delegate all or any of their powers to such other Directors, Managers or
other persons as they think fit and shall have power to grant to any such person such
power of attorney, as they deem expedient and such powers at pleasure to revoke,
subject to Section 292 and 312 of the Companies Act, 1956.
32. Subject to Provision of the Companies Act, 1956 the director shall receive such
remuneration for their services as may, from time to time, be determined by the Company
in general meeting or may be contained in an agreement, if any, between the Company
and any Director or Directors.
33. Subject to the provisions of the companies Act, 1956 and the Rules framed thereunder,
each Director shall receive out of the funds of the Company by way of sitting fees for his
services a sum not exceeding Rs. 1000/- (Rupees One Thousand) for every Board
meeting attended by him.
34. A Director shall not be required to hold any qualification shares in the Company and also
not required to retire by rotation.
35. The Director shall also be paid travelling and other expenses of attending and returing
from meeting of the Board (including hotel expenses) and any other expenses properly
incurred by them in connection with the business of the Company. The Directors may
also be remunerated for any extra services done by them outside their ordinary duties as
Director, subject to the provisions of Section 314 of the Act.
POWERS AND DUTIES OF DIRECTORS
36. The business of the Company shall be managed by the Board of Directors who may pay
all such expenses preliminary and incidental to the promotion, formation, establishment
and registration of the Company as they think fit and may exercise all such power of the
Company and do on behalf of the Company all such acts as may be exercised or done by
the Company in general meeting and are not barred by statue or by these Articles and
are required to be exercised or done by the Company in General Meeting, subject
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nevertheless to any regulations of the Articles, to the provisions of the statue and to such
regulations not being inconsistent with aforesaid regulations or provisions as may be
prescribed by the Company in general meeting but no regulation made by the Company
general meeting shall invalidate any prior act of the Directors which would have been
valid if such regulations had not been made.
37. The Board of Directors may form time-to-time, pay to the members such interim dividends
as appear to be justified from the profits of the Company.
BORROWING POWERS
38. Subject to section 58-A and 292 of the Companies Act. 1956, and Regulations made
thereunder and Directions issued by the RBI the directors may, from time to time, raise
or borrow any sums of money for and on behalf of the Company from the member or
other persons, companies or banks or they may themselves advance money to the
company on such interest as may be approved by the Directors.
39. The Directors may, from time to time, secure the payment of such money in such manner
and upon such terms and conditions in all respects as they deem fit and in particular by
the issue of bonds or debentures or by pledge, mortgage, charge or any other security on
all or any properties of the Company (both present and future) including its uncalled
capital for the time being.
40. Any debenture, bonds, or other securities may be issued at discount, premium or
otherwise and with special privileges as to redemption, surrender, drawing and allotment
of shares of the Company and otherwise.
OPERATION OF BANK ACCOUNTS
41. The Directors shall have the power to open bank accounts to sign cheques on behalf of
the Company and to operate all banking accounts of the Company and to receive
payments, make endorsements, draw and accept negotiable instruments, haudies and
bills or may authorise any other person or persons to exercise such powers.
ACCOUNTS
42. (a) The Board shall, from time to time, determine whether and to what extent and at
what, times and places and under what conditions or regulation the accounts and
books of the Company or any of them shall be open to the inspection of members
(not being Director).
(b) No members (not being Director) shall have any right of inspecting any accounts
or books of account of the Company except as conferred by law or authorised by
the Board or by the Company in General Meeting.
43. The Directors shall in all respect comply with the provisions of Section 209, 209A,
210,211,215,216,217,218, 220, 221 and 222 of the Act, and profits and Loss Account,
Balance Sheet and Auditors Report and every other document required by law to
annexed or attached as the case may be, to the Balance Sheet, to be sent to every
member and debenture holder of the Company and every trustee for the holders of the
debentures issued by the Company at least twenty one days before the date of Annual
general meeting of the Company at which they are to be laid, subject to the provisions of
section 219 of the Act.
AUDIT
44. (a) The first Auditor of the Company shall be appointed by the Board of Directors
within one month from the date of registration of the Company and the Auditors
so appointed shall hold office until the conclusion of the first Annual General
Meeting.
(b) At each annual General Meeting the Company shall appoint an Auditor to hold
Office from the conclusion of the Meeting till the conclusion of the next Annual
General Meeting.
(c) The remuneration of the Auditor shall be fixed by the Company in the Annual
General Meeting or in such manner as the Company in the Annual General
Meeting may determine. In case of an Auditor appointed by the Board his
remuneration shall be fixed by the Board.
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COMMON SEAL
45. (a) The Common Seal of the Company may be made either of metal or of rubber as
the directors may decide.
(b) The Board shall provide for the safe custody of the Company’s Common Seal.
(c) The Seal shall not be affixed to any instrument except by the authority of a
resolution of the Board or of a Committee of the Board authorised by it in that
behalf and except in the presence of atleast one director who shall sigh every
instruments to which the seal of the Company if so affixed. The share certificate
will, however, be signed and Sealed in accordance with Rule 6 of the Companies
(Issue of Share Certificates) Rules, 1960.
SECRECY
46. Subject to the provisions of law of land and the act, every manager, auditor trustee,
member of a committee, officer servant, agent accountant or other persons employed in
the business of the company shall, if so required by the Board of Directors before
entering upon his duties, sign, declaration, pledging himself to observe strict secrecy
respecting all transactions of the Company with its customers and the state of account
with individuals and in matters relating thereto and shall by such declaration pledge
himself, not to reveal any of the matters which may come to his knowledge in the
discharge of his duties except when required to do so by the directors or by any court of
law and except so far as may be necessary in order to comply with any of the provisions
in these presents.
WINDING UP
47. Winding up when necessary will be done in accordance with the requirements of the
Companies Act, 1956 or statutory modification thereto.
INDEMNITY
48. Subject to the provisions of Section 201 of the Act, every Director, Manager, Auditor,
Secretary and other officers or servants of the Company shall be indemnified, out of the
assets of the Company against any bonafide liability incurred by him in defending any
bonafide proceedings, whether civil or criminal, in which judgement is given in his favour
or in which he is acquired or in connection with any application under section 633 of the
Act, in which relief is granted to him by the Court.
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