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Articles of Association

1911 Encyclopedia Britannica

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In English company law, the regulations for the internal management of a joint stock company registered under the Companies Acts. They are, in fact, the terms of the partnership agreed upon by the shareholders among themselves. They regulate such matters as the transfer and forfeiture of shares, calls upon shares, the appointment and qualification of directors, their powers and proceedings, general meetings of the shareholders, votes, dividends, the keeping and audit of accounts, and other such matters. In regard to these internal regulations the legislature has left the company free to adopt whatever terms of association it chooses. It has furnished in the schedule to the Companies Act 1862 (Table A), a model or specimen set of regulations, but their adoption, wholly or in part, is optional; only if a company does not register articles of its own these statutory regulations are to apply. When, as is commonly the case, a company decides to have articles of its own framing, such articles must be expressed in separate paragraphs, numbered arithmetically, and signed by the subscribers of the memorandum of association. They must also be printed, stamped like a deed, and attested. When so perfected, they are to be delivered, with the memorandum of association, to the registrar of joint stock companies, who is to retain and register them. The articles of association thereupon become a public document, which any person may inspect on payment of a fee of one shilling. This has important consequences, because every person dealing with the company is presumed to be acquainted with its constitution, and to have read its articles. The articles, also, upon registration, bind the company and its members to the same extent as if each member had subscribed his name and affixed his seal to them. (See also Memorandum Of Association; Company; Incorporation.) In the United States, articles of association are any instrument in writing which sets forth the purposes, the terms and conditions upon which a body of persons have united for the prosecution of a joint enterprise. When this instrument is duly executed and filed, the law gives it the force and effects of a charter of incorporation.