ARTICLES OF ASSOCIATION
- The articles of association of a company are its rules and regulations, which are framed to manage its internal affairs. Just as the memorandum contains the fundamental conditions upon which the company is allowed to be incorporated, so also the articles are the internal regulations of the company (Guiness vs. Land Corporation of Ireland).
- These general functions of the articles have been aptly summed up by Lord Cairns in Ashbury Carriage Co. vs. Riches as follows:“The articles play a part subsidiary to memorandum of association.
- They accept the memorandum as the charter of incorporation, and so accepting it the articles proceed to define the duties, the rights and powers of the governing body as between themselves and the company and the mode and form in which the business of the company is to be carried on, and the mode and form in which changes in the internal regulation of the company may from time to time be made.”
- The document containing the articles of association of a company (the Magna Carta) is a business document; hence it has to be construed strictly. It regulates domestic management of a company and creates certain rights and obligations between the members and the company [S.S. Rajkumar vs. Perfect Castings (P) Ltd.].
- The articles of association are in fact the bye-laws of the company according to which director and other officers are required to perform their functions as regards the management of the company, its accounts and audit.
- It is important therefore that the auditor should study them and, while doing so he should note the provisions therein in respect of relevant matters.
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