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ARTICLES OF ASSOCIATION

ARTICLES OF ASSOCIATION. 1) Articles of Association of a company contain the rules and Regulations relating to the Management of its internal Affairs. 2) It defines the rights, powers and duties of the Management.

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ARTICLES OF ASSOCIATION

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  1. ARTICLES OF ASSOCIATION

  2. 1) Articles of Association of a company contain the rules and Regulations relating to the Management of its internal Affairs. • 2) It defines the rights, powers and duties of the Management. • 3) It must not contain anything which is against the memorandum of association or against the companies Act or Public policy. • 4) A public company limited by shares may Register its own Articles of Association or it may adopt Table A . • 5) A company limited by Guarantee with out having share capital may file its own Articles or may adopt Table C. • 6) The Articles of Association must be printed, divided into paragraphs, numbered consecutively and signed by each signatory to the MOA in the presence of at least one attesting witness.

  3. The articles of a company must contain the following restrictions. • Restrict the right to transfer shares. • Limit the number of members to fifty. • Prohibit any invitation to the public to subscribe for any shares in, or debentures of, the Company.

  4. Contents in the Articles of Association • Adoption of preliminary contracts. • Number and value of shares • Allotment of shares • Calls on shares • Transfer of shares • Forfeiture,reissue,surrender of shares • Alteration of share capital • Share certificates • Conversion of shares in to stocks • Meetings and proceedings • Voting rights , proxies and polls • Appointment , Remmunaration,etc of Directors • Borrowing powers • Dividend and Reserves • Accounts and audit • Procedure of winding up • Seal of the company

  5. Differentiate between MOA&AOA

  6. Prospectus • A prospectus is thus any document which invites the public to provide funds to the company bye law of deposits or subscriptions to its shares and debentures. • It is a valuable document containing important details about a company • It should be duly signed by the company.

  7. Important s of Prospectus • It is an invitation to the public to subscribe to the shares and debentures of the company. • It informs public about the company and stimulates people to invest money in the company. • It provides an authentic record of the terms and conditions on which shares and debentures have been issued. • It identifies the persons who can be held responsible for any untrue or incorrect statements made in it. • It reflects the business policies and programmes of the company. • It helps the investors to take investment decisions.

  8. Contents of the prospectus • Name of the company • Address of the Registered office. • Nature and objects of business • Capital structure • History of the company • Particulars about Underwriters,auditors,brokers,bankers • Date of opening and closing subscription list • Name of stock exchanges where applications for listing has been made. • Information about material contracts with managerial personnel • Outstanding liabilities • Financial information. • Consent of managerial personnel • Management perception of risk factors. • Statutory or other information.

  9. Types of prospectus • Shelf prospectus: It is a prospectus issued by public financial institutions like public sector bank and scheduled bank • Red -herring Prospectus: It means a prospectus which does not contain full particulars on price of the securities offered and their number. It is issued by companies which raise capital through the book building process.

  10. Statement in lieu of prospectus • A public company issue this to the Registrar of Companies all east three days before the allotment of shares.

  11. Minimum subscription • Minimum amt of money from the proposed issue of shares • If theminimum subscription is not received within 120 days of the issue of prospectus, the amt received on applications must be refunded to the applicantswithin 10 days.

  12. Minimum subscription cover following expenses • Preliminary expenses • Underwriting commission • Working capital • The cost of any property; purchased or to be purchased. • Payment of any money borrowed for the above purpose • Any other necessary expendeture

  13. Scanning a prospectus from the view point of an investor

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