The Articles of Association is an internal constitutional document of a company that contains rules and regulations for the internal management of the company. It governs the relationship between the company and its members, and among the members themselves. “A company without well-drafted Articles is like a ship without a compass-directionless and vulnerable.”

What is Article of Association (AOA)

·      Under the Company Act, 2013, the (AOA) is governed by section 5, 14, and 31.

·      Section 2(5) covers the definition of Articles of Association. “Articles” means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this act.

·      In simple terms, the Articles of Association is a fundamental document that serves as by laws or internal rulebook for the governance and management of a company's day-to-day affairs.

Content of Articles of Association (AOA) (Section 5(3)- (6))

Certain provisions of the AOA can be entrenched, meaning they can only be altered if stricter conditions (beyond a special resolution) are met.

·      Entrenchment can be included at the time of formation, or later by unanimous agreement of all members (private company) or by special resolution (public company).

·      Must be notified to the Registrar of Companies (ROC).

Forms of Articles of Association (AOA)

According to the Companies Act of 2013, AOA consists of different types of frames specific for companies that need to regulate, and prescribed forms are mentioned under section 5 (6) of the Act.

It is prescribed for companies such as companies that are limited by shares, companies that are limited by guarantee of having a share capital, companies that are limited by guarantee of not having a share capital, etc. According to Section 5(7), such companies can adopt the model articles in these forms.

Schedule I of the Companies Act, 2013 consists of the model Articles under the forms of Tables F, G, H, I, and J.

Articles of Association (AOA) scope

·       As the article of association plays a major role in running the company, it is still bound by the Memorandum of Association, which serves as the ‘supreme law’ within the company.

·       The alteration of Articles of Association, it is a quite long and procedure since in this procedure it needs to be singed and approved by all the shareholders and the directors of the company, as well it needs to be filed to the Registrar of the companies, who is appointed by the Ministry of Corporate Affairs.

·       All of this is done to avoid any type of mischievous clauses or arbitrary which can lead to the company exploiting its members unfairly.

Alteration of Articles of Association (AOA)

·      Under the section 14 of the Companies Act, 2013, it states that the power of a company of alteration of AOA, is given such as that alteration can be done but within the bounds of the MOA and must passes by the prescribed procedure of the passing a special resolution. This is one of the essential powers of a company, hence its effect can turn a private company into a public company.

·       A company can be converted from a private company to a public company by altering its clauses. This kind of alteration is done in the form of removing the three clauses mentioned in section 2 (68) which mentions the characteristics of a private company. Once the alteration is done, it must be filed and registered with a copy of the resolution and the altered AOA within 15 days of passing such a resolution for alteration.

Special Resolution meaning

A special resolution requires:

·       Notice specifying the intention to propose it as a special resolution.

·       Votes cast in favor must be not less than 3 times the votes cast against it.

·       At least 75% of the votes are in favor.

Limitation on Alteration

·       Cannot conflict with MOA

·       Cannot Violate the companies Act, 2013

·       Cannot Increase Member’s Liability (section 38)

·       Must be Bona Fide

·       Cannot Defraud Minority

Effect of Alteration

Alteration is binding on all members, including those who voted against it.

The altered AOA becomes part of the company’s constitution from the date of registration.

Every member is deemed to have notice of the alteration (Doctrine of Constitution Notice).

Filing Requirements

Conclusion

The alteration of Articles of Association is a vital power granted to companies under Section 14 of the Companies Act, 2013, enabling them to adapt their internal rules to changing business needs. However, this power is not absolute — it must be exercised through a special resolution and must be bona fide for the benefit of the company as a whole. Alterations cannot override the Memorandum of Association, violate the Companies Act, or cause fraud on minority shareholders. Thus, the law strikes a careful balance between corporate flexibility and protection of member rights.

FREQUENTLY ASKED QUESTIONS (FAQ)

Q1. What is the Alteration of AOA?

Alteration of AOA means making changes to the internal rules and regulations of a company as permitted under the Companies Act, 2013.

Q2. Which section governs alteration of AOA?

Section 14 of the Companies Act, 2013.

Q3. What type of resolution is required to alter the AoA?

A Special Resolution — requiring at least 75% of votes in favor.

Q4. Can AOA be altered to override the Memorandum of Association?

No. AoA is subordinate to the MoA. Any alteration conflicting with the MOA is void.

Q5. Can a company increase a member's liability through alteration?

No. Under Section 38, a member cannot be compelled to take more shares or pay more money without their written consent.

Q6. Within how many days must the altered AOA be filed with the ROC?

Within 30 days of passing the special resolution, using Form MGT-14.

Q7. Is alteration binding on members who voted against it?

Yes. Once validly altered, the new AOA is binding on all members, including dissenting ones.

Q8. Can alteration of AOA justify breach of an existing contract?

No. The alteration may be valid, but the company remains liable for any breach of contract caused by it.

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