What are articles of association How can they be altered?
The Articles of Association may be changed by the shareholders passing a special resolution in a general meeting or by written resolution. A copy of the resolution and the new articles of association must be sent to Companies House within 15 days.
What happens if you breach articles of association?
A breach of the obligations provided within the articles of association will, usually, render the action taken void, whereas a breach of the obligations provided within a shareholders’ agreement will give rise to a claim for breach of contract by the wronged party.
What is entrenchment of articles of association?
Entrenchment means “the fact of something being strongly established”. In the legal sense, it means the addition of the provision which makes amendments either more difficult or almost impossible.
What happens if a director breaches the articles of association?
If a director of a company breaches his or her duties, they could face civil action and, in some cases, criminal sanction. Infringement of directors’ duties and resulting legal action can have significant consequences for the director, company, shareholders and creditors.
What are the limitations to alteration of articles of association?
Limitations on Alteration of Articles
- Not inconsistent with provisions of any act.
- Not illegal or against public policy.
- Not inconsistent with the order of a government or a court.
- Must be bonafide.
- Must not be fraudulent.
- Must not result in breach of contract.
- Must not increase liability of the members.
What type of alterations is permitted in the articles of association?
Company can alter its Article by way of addition, deletion, modification, substitution, or in any other way, only if it wants. To alter the Article of association of Company By giving Notice of at least 7 days. At the Board meeting, the given resolutions in respect of alteration in AOA must be passed.
Are articles of association legally binding?
Articles of association are rules governing the internal affairs of a company. Every company is required to have articles by law and the articles are legally binding on the company and all of its members.
What are the legal effects of articles of association?
4 Binding Effects of Memorandum and Articles of Association
- Binding the company to its members: The company is bound to the members to observe and follow the articles.
- Binding on members in their relations to the company:
- Binding between members:
- No binding in relation to the outsiders:
What is entrenched AOA?
An entrenched clause or entrenchment clause of a basic law or constitution is a provision which makes certain amendments either more difficult or impossible, i.e., inadmissible. It may require a form of super majority, a referendum submitted to the people, or the consent of another party.
What is an entrenched article?
A company’s articles may contain provision (“provision for entrenchment”) to the effect that specified provisions of the articles may be amended or repealed only if conditions are met, or procedures are complied with, that are more restrictive than those applicable in the case of a special resolution.
Which of the following include disqualification of directors?
Under company law, a director can be disqualified for any of the following reasons:
- He is of an unsound mind and is declared so by the court.
- He is insolvent.
- He is in the process of declaring insolvency and his application is pending.
What are the limitations of memorandum of association?
The memorandum of association is the constitution of the company because it defines its limitations and the sphere of its activities. The memorandum cannot be altered by the company, except by fulfilling the conditions laid down in the Companies Act for specific activities and situations.