Articles of association,
Definition of Articles of association:
British The internal rule book that every incorporated organization must have and work by. It forms a part of the constitution of an organization.
The articles of association are a contract (1) between the members (stockholders, subscribers) and the organization and (2) among the members themselves. It sets out the rights and duties of directors and stockholders individually and in meetings. Certain statutory clauses (such as those dealing with allotment, transfer, and forfeiture of shares) must be included; the other clauses are chosen by the stockholders to make up the bylaws of the organization. A court, however, may declare a clause ultra vires if it is deemed unfair, unlawful, or unreasonable. A copy of the articles is lodged with the appropriate authority such as the registrar of companies. Articles are public documents and may be inspected by anyone (usually on payment of a fee) either at the premises of the organization and/or at the registrars office. Lenders to the organization take special interest in its provisions that impose a ceiling on the borrowings beyond which the organizations management must get shareholders approval before taking on more debt. The usual American term is articles of incorporation.
Articles of association often identify the manner in which a company will issue shares, pay dividends, audit financial records, and provide voting rights. This set of rules can be considered a user's manual for the company because it outlines the methodology for accomplishing the day-to-day tasks that must be completed.
Articles of association form a document that specifies the regulations for a company's operations and defines the company's purpose. The document lays out how tasks are to be accomplished within the organization, including the process for appointing directors and the handling of financial records.
How to use Articles of association in a sentence?
- Articles of association can be thought of as a user's manual for a company, defining its purpose and outlining the methodology for accomplishing necessary day-to-day tasks.
- In the the U.S. and Canada, articles of association are often referred to as "articles" for short.
- The content and terms of the "articles" may vary by jurisdiction, but typically include provisions on the company name, its purpose, the share structure, the company's organization, and provisions concerning shareholder meetings.
Meaning of Articles of association & Articles of association Definition