3 Article of Association

8/8/2019 3 Article of Association

1/10

Articles of AssociationArticles of Association

ArticlesArticles ofof associationassociation isis anotheranother documentdocument ofofimportanceimportance forfor existenceexistence ofof aa companycompany.. ItItcontainscontains regulationsregulations forfor thethe internalinternal regulationregulation ofof

aa companyscompanys affairsaffairs.. ArticlesArticles ofof associationassociation arearelikelike partnershippartnership deeddeed.. TheyThey prescribeprescribe rulesrules andandbyebye lawslaws forfor thethe generalgeneral managementmanagement ofof thethecompanycompany andand forfor thethe attainmentattainment ofof itsits objectsobjects asas

givengiven inin itsits memorandummemorandum..

TheThe ArticlesArticles playplay aa part part subsidiarysubsidiary toto thethememorandummemorandum.. TheyThey acceptaccept memorandummemorandum asaschartercharter ofof incorporationincorporation ofof thethe companycompany..


2/10

ItIt isis optionaloptional forfor aa publicpublic companycompany limitedlimited bybysharesshares toto registerregister Articles,Articles, whereaswhereas otherother typestypes ofofcompaniescompanies ii..ee.. companycompany limitedlimited byby guaranteeguarantee ororanan unlimitedunlimited companycompany oror aa privateprivate companycompany

limitedlimited byby shares,shares, areare requiredrequired toto dodo sosocompulsorilycompulsorily.. IfIf aa companycompany requiredrequired toto registerregisterarticlesarticles doesdoes notnot registerregister anyany articles,articles, TableTable AA(model(model setset of of 9999 ArticlesArticles providedprovided atat thethe endend of of

thethe CompaniesCompanies Act)Act) shallshall bebe automaticallyautomaticallyapplicableapplicable..


3/10

Alteration of ArticlesAlteration of Articles

TheThe articles,articles, beingbeing thethe internalinternal regulationregulation ofof thethecompany,company, cancan bebe freelyfreely alteredaltered byby thethe companycompany..

AccordingAccording toto SecSec 3131 thethe companycompany maymay alteralter itsits

articles,articles, asas oftenoften asas required,required, byby passingpassing aa specialspecialresolutionresolution..


4/10

Doctrine of Indoor ManagementDoctrine of Indoor Management

TheThe MemorandumMemorandum andand ArticlesArticles areare publicpublicdocument,document, therefore,therefore, DoctrineDoctrine ofof ConstructiveConstructive

NoticeNotice willwill estopestop aa personperson dealingdealing withwith aa companycompanyfromfrom pleadingpleading ignoranceignorance of of thethe provisionsprovisionscontainedcontained inin itsits memorandummemorandum oror articlesarticles..

However,However, anan outsideroutsider cannotcannot bebe deemeddeemed toto havehave

constructiveconstructive noticenotice ofof anyany proceduralprocedural failurefailure whichwhichhehe hashas nono meansmeans ofof discoveringdiscovering..


5/10

TheThe doctrinedoctrine ofof indoorindoor managementmanagement isis that that aapersonperson dealingdealing withwith thethe companycompany inin goodsgoods faithfaithhavehave aa right right toto assumeassume that that thethe internalinternal

requirementrequirement prescribedprescribed inin publicpublic documentsdocuments havehavebeenbeen prescribedprescribed.. TheyThey areare notnot boundbound toto enquireenquireintointo thethe regularityregularity ofof thethe internalinternal proceedingsproceedings..

RoyalRoyal BritishBritish BankBank vsvs TurquandTurquand ((18561856))


6/10

Exceptions to the Doctrine of IndoorExceptions to the Doctrine of IndoorManagementManagement

(i)(i) KnowledgeKnowledge ofof thethe irregularityirregularity -- HowardHoward vv PatentPatentIvoryIvory Company(Company(18881888)) borrowedborrowed 35003500BPBP fromfromthemselvesthemselves..

(ii)(ii) NegligenceNegligence onon thethe partpart ofof thethe outsidersoutsiders

(iii)(iii) ForgeryForgery TheThe doctrinedoctrine oror rulerule isis of of nono availavailwherewhere thethe outsideroutsider hashas reliedrelied uponupon aa documentdocument

whichwhich isis aa forgedforged one,one, becausebecause forgeryforgery isis voidvoidabab initioinitio.. RubenRuben vsvs GreatGreat FingallFingall LtdLtd ((19061906))


7/10

Memorandum & ArticlesMemorandum & Articles

MemorandumMemorandum

(i)(i) Contains fundamentalContains fundamentalconditions uponconditions upon

which alone co. iswhich alone co. isallowed toallowed toincorporate. Itincorporate. Itdefines limits &defines limits &

objects of the co.objects of the co.(ii)(ii) It is subordinate toIt is subordinate to

Act onlyAct only

ArticlesArticles

(i)(i) They are internalThey are internalregulations of co. andregulations of co. and

are subsidiary toare subsidiary toMOAMOA

(ii)(ii) Subordinate to Act asSubordinate to Act aswell as memorandumwell as memorandum


8/10



(iii) Must compulsorily be(iii) Must compulsorily befiled with ROCfiled with ROC

(iv) They define the(iv) They define therelation between corelation between co& outsiders& outsiders

(v) Cannot be easily be(v) Cannot be easily bealteredaltered

ArticlesArticles

(iii) Public co limited by(iii) Public co limited byshares need not fileshares need not file

(iv) They govern internal(iv) They govern internalrelationship betweenrelationship betweenco & membersco & members

(v) Can be easily altered(v) Can be easily altered


9/10



(vi) Acts done by a co.(vi) Acts done by a co.ultra vires the MOAultra vires the MOA

are void and cant beare void and cant beratifiedratified

ArticlesArticles

(vi) Acts done by co.(vi) Acts done by co.ultra vires the Articlesultra vires the Articles

but intra vires thebut intra vires theMemorandum areMemorandum aresimply irregular andsimply irregular andcan be ratified by thecan be ratified by theshareholdersshareholders


10/10



(vii) Outsiders have no(vii) Outsiders have noremedy against ultraremedy against ultravires contractsvires contracts

ArticlesArticles

(vii) Can enforce the(vii) Can enforce thecontract if it is onlycontract if it is only

ultra vires articlesultra vires articles

Documents

3 Article of Association