Articles of Association - SS2 Accounting Lesson Note
The Articles of Association (AOA) is a legal document that outlines the rules and regulations governing the internal management of a company. It is one of the key documents required for the incorporation of a company. The AOA is like the company's internal rulebook, which sets out how the company is run, how decisions are made, and how disputes are resolved. The AOA usually contains the following information:
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Share Capital and Shares: This section outlines the rights and restrictions associated with the company's shares, including the different classes of shares, their voting rights, and the process for issuing and transferring shares.
Directors and Board Meetings: This section outlines the number, appointment, and powers of the directors, as well as the rules for holding and conducting board meetings.
Company Secretary: This section outlines the appointment and duties of the company secretary, who is responsible for ensuring the company complies with legal and regulatory requirements.
Dividends and Reserves: This section outlines the company's policy on distributing profits to shareholders, as well as the rules governing the creation and distribution of reserves.
General Meetings: This section outlines the rules for holding and conducting general meetings of the company's members, including the process for voting on resolutions.
Alteration of Articles: This section outlines the procedure for amending the AOA, including the approval process and any requirements for notifying members.
The AOA is a crucial document as it sets out the rules and regulations governing the internal management of the company. It provides clarity and transparency on how the company is run and how decisions are made, which helps to prevent disputes and ensure the smooth operation of the business.
Any amendments to the AOA must be approved by the company's members and filed with the Registrar of Companies. The AOA is a public document and can be inspected by anyone who wishes to do so.