According to section 2(2) of the Companies Act, Article means rules which are made in the initial phase or establishment of the Company or which are amended from time to time, in accordance with the Companies Act already passed. Mutual relations and liabilities between the company and its members are determined by the article. Such rules must be in accordance with the provisions of the Companies Act. Articles are for the company’s internal decision.
According to Section 36(1) of the Companies Act, in the absence of any other decision in the Act after registration.
Of the company’s memoirs and articles, these establish mutual contractual relations between the company and the shareholders, by which both remain liable to each other as if each of them personally contracted with the company. Content of the article- According to the Companies Act, 1956, the following must be described specifically.
Company Articles-
1. Details of exclusion of table ‘A’. 1.
2. Acceptance of initial contracts.
3. Rules of division of capital and its growth, decrease or change etc
4. Shares or types of shares, numbers and prices related to rules, requests, allocations, transfer, modifications, etc
5. Rules with respect to lending power.
6. Rules of the law of information about meetings, working method, vote-counting, work-details etc
7. Rules regarding appointment number, efficiency, rights, liability, availability of holiday, incompetence and remuneration of directors.
8. Terms relating to the terms and conditions of appointment, rights, duties, liabilities, remuneration of managing director, secretary etc
9. Rules regarding laser process, audit, liability of preparation and other general and legal books etc
10. Rules regarding Share certificate, Share-Warrant, Bonus Share, Debenture etc
11. Process of curving the company and its rules.
Registration of Articles- According to the Indian Companies Act, the company should get its articles printed in different photographs and numbering of these is required in sequence. All signatories of the memorandum should sign articles in the presence of at least one object proof and with their names, address and business should be mentioned. According to Section 30, the Indian Stamp Act is required on the stamp-adhesive articles at the stamp rate applicable in that State.
Legal importance of association articles: Reciprocal relations between the company and its members can be determined by association articles, and the rules assessed in it apply to each other. The company cannot do any such work towards its shareholders which has not been mentioned in its articles. Similarly, shareholders can’t do such a job against the company, the right to do so they are not given in the article. A party on violatheism can file a lawsuit against other party in court, but it is notable that generally, the rules of article do not establish any kind of indentures, even if the company may, if it wants it, control the mutual relations of members by its article (section 36). The liabilities produced by the article can be explained as follows –
(1) Company-liability to its members – The Company is obliged to its members. The company cannot do such work with its members, which it has not mentioned in its articles.
(2) Member of the Company- Liability- Company members are also so obliged as they have contracted to comply with the company’s articles.
(3) Liability Intercess among Members – No contract may be made between the members of the Company by article, yet they interchange their rights which may be made effective through the Company, but one Member may not force another Member to comply with the Article, as an intercess between the Contractual Relations Members may not be set up by these documents. The member who does not follow the decisions of the article can be submitted suit in court by the company.
(4) Company liability for outsiders – The Company itself or any member thereof is not obliged to follow the rules or sub-rules of the article to the external people. In other words, it can be said that an article cannot be considered as a contract to assess relations between the company and the external people.