What Is Articles of Association of a Company in Company Law?

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Issue: What is Articles of Association of a company in company law?

Discussion:

Section 29(1) of the Companies Act 1965 provides that a company may register their article of association, which pertains to the internal regulations of the company, with the Registrar of Companies. Next, a company limited by shares is not compulsory to register its articles of association. However, articles of association may adopt the regulation found in the Fourth Schedule to the Companies Act 1965, which is also known as Table A.

According to Section 30(2) of Companies Act 1965 provided that if a company does not register its articles, the regulations in Table A shall be the company’s articles. Even where the company has registered its articles, the regulations in Table A apply unless the registered articles exclude or modify the application of the said provisions in Table A.

Requirement of Articles of Association

The Companies Act 1965 does not regulate the contents of the articles but the following aspects must be complied and included in articles of association:

Firstly, Section 29(2) mentions that the articles of association must be printed and divided into numbered paragraphs. It must also be signed by each of the subscribers to the memorandum in the presence of at least 1 witness and the witness cannot be a subscriber.

Besides that, If the company is an unlimited company with a share capital, Section 29(3) requires its articles must state its authorised share capital and its division into shares of a fixed amount.

Moreover, Section 29(4) provides that if the company is an unlimited company (other than an unlimited company with a share capital) or a company limited by guarantee or a company limited by both shares and guarantee, its articles shall state the maximum number of members in the company.

        Furthermore, Section 15(1) requires a private company limited by shares, its memorandum or articles of association must contain the restriction clauses such as the limitation on the number of members to not more than 50 members, restriction on the transfer or shares, the prohibition offer the shares to public and prohibit to invest any capital to company.

        In addition, Section 122(3) and 139(1A) also required a company to insert the names of its first directors and first secretary in its memorandum or articles of association. If any of this information is not in the company memorandum, then it must be inserted in its articles of association.

        Lastly, If the company is a public listed company, that is a company listed on the Bursa Malaysia. Therefore, it must comply with the Listing Requirements. The company’s articles of association must contain the mandatory clauses prescribed about the requirements.

Effect of Articles of Association

The articles of association is statutory contract between the company and members and between the members of themselves.

1. Contract between company and members 

According to Section 33(1) of Companies Act 1965, the articles of association when registered with the ROC shall bind the company and the members of the company as the company and each of the members have signed the document. The members are deemed to have agreed to observe all the provisions in the articles. Section 33(1) is a codification of the common law principles and this can illustrate by: