Essentials of Drafting the Articles for a Private Company

The most important step in the formation of company is the preparation of the articles of association. ‘Articles’ is defined in section 2(2) of the Act. The main provisions regarding the articles of association will be found in sections 26 to 31, 36 and 38 of the act. To frame an article of association for a private company, ten most important points are: -
1. Interpretation clause; which should explain the various terminologies used in the articles.
2. Exclusion or partial exclusion, if any of Table A;
3. Adoptions or executions or preliminary contacts, if any;
4. Regulations regarding share capital, various types of share capital, rights of shareholders, procedure of issuing share certificate, variation of the rights etc.
5. Number and value of share and rules as to share certificates;
6. Rules as to company’s lien on the members’ shares for the amount not paid in respect of them;
7. Rules as to transfer , transmission and forfeiture of shares and rules as to alteration of capital;
8. Rules as to general meeting and rules as to the directors, their remuneration, etc;
9. Rules as to dividends and audit; and
10. Rules as to indemnity and winding up.