What are Articles of Association
The Articles of Association is a certificate that stipulates the regulations for a company’s activities. The articles of association determine the organization’s purpose and outlines how operations are to be conducted within the company.
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Articles of Association explained
The Articles of Association is a compulsory certificate that must be attained by any company that wants to carry out its operations legitimately. It specifies the rules and regulations for the performance of a company, the handling of its internal affairs, as well as the management of financial issues.
It is a considered as a contract between the company and its members, and it is binding to existing as well as to future members. It outlines the duties and responsibilities of the members towards the organization and the organization’s obligations towards its members.
The articles of association may include:
- The issuing and transferability of shares
- The power of voting rights
- The appointment of directors
- The audit of financial records
- The dividend policy
- The management decisions
- Confidentiality issues
- The conditions of winding up
In the event that any contradiction is found between the organization’s operations and the rules and regulations outlined in the articles of association, the company will be regarded as performing unlawful business.
The articles of association are a prerequisite for the incorporation of a company under the laws and regulations of the jurisdiction in which the company is established. Together with the memorandum of association, they comprise the foundations of a company.