Articles of Association — Meaning, Contents and the Doctrine of Indoor Management

Meaning. The Articles of Association, governed by Section 5 of the Companies Act, 2013, are the rules and bye-laws that regulate the internal management of the company — the working machinery by which the objects stated in the Memorandum are actually carried into practice from day to day. Where the Memorandum tells the outside world what the company may do, the Articles tell the company's own officers and members how it will do it.

Contents. A typical set of Articles deals with matters such as:

• the different classes of shares and the rights attached to each;
• the procedure for making calls on partly paid shares, for forfeiting shares on which calls remain unpaid, and for the transfer and transmission of shares;
• the conduct of general meetings — notice periods, quorum, voting and the appointment of proxies;
• the appointment, retirement, powers, duties and remuneration of directors;
• the company's borrowing powers and the procedure for creating charges on its assets;
• the declaration of dividends and the creation of reserves; and
• the keeping of accounts, audit, and the procedure to be followed on winding up.

A public company limited by shares may adopt one of the model sets of Articles set out in the Act (commonly called Table F) instead of drafting a wholly original set, and many small and newly formed companies do exactly that. …