Article of association is an important document when it comes to registering the Section 8 company. Learn what a Section 8 company is and how to draft an AOA of Section 8 company from experts directly.
Section 8 company is a company licensed under Section 8 of the Companies Act, 2013. It is a non-profit organization (NPO) that is formed to improve commerce, arts, science, sports, education, research, etc. The revenue of such categories of corporations is applied towards the development of their goals in the respective fields and no income is paid to any of the partners. Read more to know what is a Section 8 company and how to draft an AOA of Section 8 company.
What Is an Article of Association (AoA) Of a Section 8 Company?
An AoA lays down the restrictions and laws for the internal administration of the firm. It describes all the responsibilities, rights, and powers of the management of the firm. An AoA is associated with the Memorandum of Association(MoA).
An MoA of section 8 company determines the goals of the company whereas, an AoA lays down the interior actions to be attended to accomplish these goals of the corporation. An AoA simplifies the relationship between the shareholders and the corporation and among the shareholders themselves.
The AoA incorporates the guidelines with respect to the rate capital, move of offers, casting a ballot rights of the investors, the arrangement of chiefs, accounts, a review of the firm, and so forth. Specialists at Vakilsearch handle in excess of 1000 organizations and their conventions, in view of their experience here are a portion of the significant headings an AoA ought to contain.
Important Headings in an AoA
This is an important heading. This denotes that the regulations explain in Table F of Schedule 1 to the Act which is amended from time to time and applies to the specific private limited company. Under this heading, the various terminology used in the document will be explained.
This heading compasses the roles of a private company. Usually, a company is called a private company when it refers to Section 2 (68) of the Companies Act,2013. Based on this interest the right to transfer its shares and limits the number of its members to 200. Subsequently, it explains details about the employment category and prohibits invitation to the public to invest in any security of the company.
The legal share investment of the firm shall be as referred to in clause 8 of the MOA of the company.
Click here to know more: Sec 8 Company Registration
Redeemable Preference Share
This section refers to the criteria of reading able preference shares. The company will follow all the acceptable requirements of the Act, in case of issues the said preference shares are taken as total redeemable preference shares, it is partially or fully convertible with the particular shares. These shares may be agreed upon by the company at the period of the issues and exactly with the rights, privileges, and situations linked with the company on this behalf.
Shares and Certificate
This subheading deals with the allotment of shares and registration of index members. All share allotments are in provision with these articles. The company can be placed at its registered office. Register and index of members are conducted with the provisions of the Act and the Depositories Act of 1996.
The board of directors may at their intention stop the registration of any transfer of shares between the debentures in the following cases:
- The transfer of percentages or debentures to an individual who has not been authorized by the board of directors
- Any transfer of percentages on which the firm has a share.
This section describes the rights for transferring the shares and the criteria that support the same. In case of a partner or debenture proprietor’s death, the shares or debentures shall be transferred to his or her beneficiaries, officials, and any person who is authorized.
To share such debentures in the effect of the death of any partner or debenture owner may upon generating such information of heading as the board of directors may expect, register on them as the owner of the shares and make a record to the requirements of transfer herein comprised, transfer the same to some other person.
This section clarifies the various rules and regulations regarding the general meetings, annual general meetings, and notices underpinning the same.
- Annual general meeting: As per the law, the first annual general meeting of the company is conducted within eighteen months from the period of company incorporation. The next annual general meeting of the company shall be conducted on behalf of the company within six months after completing every financial year unless an extension of the period is obtained from the registrar of companies (ROC) as furnished in the Act. However, the period should not cross 15 months before the date of the first annual general meeting of the company and the next one.
- Notice of meeting: A general meeting of the company may be initiated by providing notice before 7 days. The notice has to be delivered to the partners of the company authorized to accept such notice, a general meeting may be conducted after giving shorter notice if permission is accepted, in case of an annual general meeting by all the partners authorized to vote. The partners of the company comprising not less than 95% of the capital of the company are given the right to vote at the conference.
- Extraordinary general meeting
- All general meetings other than the annual general meetings are known as extraordinary general meetings
- The board of directors may, whenever it feels fit, convene an extraordinary general meeting
- If at any instance the eligible directors who are adequate in number to form a quorum are out of the country any director or two members of the company can conduct an extraordinary general meeting.
This section of the agreement clarifies who is the chairman of the company. In case any of the board of directors shall present as chairman at every general meeting of the company, including annual general meetings.
These are general headings, apart from this an AoA also explains the meeting of directors, alternate directors, additional directors, qualification share, the total number of directors, and remuneration paid to them. It also encompasses resolutions, minutes, director sitting fees, power of the board, and other managing directors. It clearly explains the powers and duties of the director’s accounts and audit capitalization of reserves and other terms and conditions regarding indemnity, seals, secrecy, and much more.
How Vakilsearch Can Help in Drafting AoA for Section 8 Company?
When it comes to company registration: https://www.mca.gov.in/MinistryV2/incorporation_company.html and drafting the required documents experts at Vakilsearch are the best. Our experts help multinational companies in the registration process. With thousands of companies using Vakilsearch to register, we can help you to draft an Article of Association of section 8 company within a few days and provide holistic support. Reach out to us right now.