What is the ‘Articles Of Association’

The articles of association is a document that specifies the regulations for a company’s operations, and they define the company’s purpose and lay out how tasks are to be accomplished within the organization, including the process for appointing directors and how financial records will be handled.

Articles of association often identify the manner in which a company will issue stock shares, pay dividends and audit financial records and power of voting rights. This set of rules can be considered a user’s manual for the company because they outline the methodology for accomplishing the day-to-day tasks that must be completed.

BREAKING DOWN ‘Articles Of Association’

While the content of the articles of association and the exact terms used vary from jurisdiction to jurisdiction, the document is quite similar everywhere, The articles of association generally contain provisions on the company name, the purpose of the company, the share capital, the organization of the company and provisions regarding shareholder meetings.

Company Name

As a legal entity, the company must have a name and it is found in the articles of association. All jurisdictions will have rules concerning company names. Usually, a suffix such as “Inc.” or “Ltd” must be used to show that the entity is a company. Also, some words that could confuse the public, such “government” or “church” cannot be used or must be used only for specific types of entities. Words that are offensive or heinous are also usually prohibited.

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