The Content of an Article of Association

The Content of an Article of Association 1

The Article of Association is a document that defines the company’s purpose and identifies the regulations for a company’s operations. The document structures out how tasks should be achieved in an organization, how directors are appointed and how to handle the financial records of the company.

The Article of Association is seen as the constitution that guides a company, the rules and regulations that direct the internal affairs of a company. It also states the purpose of a company and how it aims to achieve its short and long term objectives.

Content of the Article of Association

As stated earlier, the Article of Association specify information about a company’s goals is achieved. Therefore, we will look at the content of an Article of Association

Company name: A company is a legal entity; therefore, it must adopt a name that must be indicated in the Article of Association. Generally, suffixes such as “Inc.” or “Ltd.” are used to indicate that a particular entity is a company. Additionally, there are words that cannot be included by certain companies, words like “government” or “church,” so as not to be misleading. Those words can also be found offensive.

Also read The Contents of a Memorandum of Association (MOA)

Purpose of the company:  The purpose for which a company must be clearly stated in the Article of Association. Although the primary purpose of a company is profit-making, companies usually have a broad purpose but it is important that the Article contain a detailed purpose of the company.

Share Capital: The article of association list the number and type of shares that encompass a company’s capital. There are various types of shares that are contained in the Article of association; it must contain at least one form of a common share and several types of preferred shares. The company can choose if and when the shares will be issued once the share capital is contained in the article of association.

Organization of the Company: This part of the Article of Associations contains the legal information about the company, its registration address, the number of directors and officers, the identity of the founders and the original shareholders. The legal advisors and auditors may also be included in this section depending on the type of business.

Shareholder Meetings: This section outlines the first general shareholder meeting provision. It details Notices, resolutions, and votes; also the rules governing subsequent annual shareholder meetings.

The Article of Association is a legal document; therefore, it is advised that business owners interact with or employ the service of a lawyer or an accountant when setting up a company.