Articles of Association
Candlefocus EditorEach jurisdiction has its own regulations and requirements forarticles of association, but there are some common terms used in most countries. The content of articles of association generally includes a variety of clauses that outline the company name, its purpose, share structure, company organization, and provisions for shareholder meetings.
The company name serves to identify the company and distinguish it from others, so it is vital to make sure it is unique. The purpose clause outlines the intention of the business, whether it is to be a holding company or a trading company, and whether it will own any other companies, among other directives. The share structure explains the type of shares that will be issued, such as common and preference shares, as well as any restrictions that may be imposed and details on distribution of profits.
The company organization outlines the roles and responsibilities of the directors and shareholders, detailing who is responsible for managing the day-to-day operations of the business and laying out the rights and responsibilities of each. Finally, the shareholder meeting clauses detail voting rights and rules, quorum and voting requirements, and other provisions related to when and how shareholder meetings can be held.
Articles of association are an essential part of forming a company and must be filed with the relevant regulatory body. Many jurisdictions have regulations that require annual reviews of articles to ensure they are up to date with the current business operations, shareholders, and applicable regulations. As such, it is important to understand what exact content needs to by included in the articles and to remain in compliance with up-to-date regulations.