These are legal documents that outline how a company must do business and describes its objective. The document describes the company’s tasks, including the appointment of directors and the maintenance of financial records.

Understanding articles of association

The articles of organization of a corporation will typically contain provisions that detail how the company will issue shares, pay dividends, audit financial records, and award voting rights. This set of regulations can be thought of as the user guide for the company because it outlines the procedure for doing the day-to-day responsibilities that are obligatory to complete. 

Articles of association typically include provisions on the business name, the purpose of the company, the share capital, the organization of the company, and provisions addressing shareholder meetings. Even though the content of the articles of association and the precise language used varies from country to country, these provisions are typically included. 

In both the United States and Canada, it is common practice to refer to them by their abbreviated form, “articles.”

Company name

The name of the company must be in the document for it to be recognized as a legal entity.

There will be regulations governing company names in every country. The suffix “Inc.” or “Ltd.” must often be used to indicate that the entity is a business. In addition, certain terms that can mislead the public, such as “government” or “church,” cannot be used or must only be reserved for certain categories of entities. In general, words that are derogatory or terrible are likewise forbidden.

Purpose of the company

The documents must also specify the rationale behind the company’s formation.

While some jurisdictions allow extremely general intents, such as “management,” others want more specific information, such as “the running of a wholesale bakery.”

Share capital

The document lists the amount and kind of shares that make up a company’s capital.

The capital of a firm shall consist of at least one class of common shares. There could be other varieties of preferred shares as well. The shares may or may not be issued by the firm; however, if they are mentioned in the articles of association, they may be issued as and when necessary.

Organization of the company

This section contains information about the company’s legal structure, such as its address, the number of directors and officers, and the names of the company’s original shareholders and founders. The auditors and legal counsel of the company may also be included in this part, depending on the legal system and the nature of the firm.

Shareholder meetings

This Section contains the provisions for the first General Meeting of Shareholders and the procedures for the annual meetings of Shareholders, including the notices, resolutions, and votes.

Small business example of articles of association

When forming a company, a person or group of people launching a business will often consult a lawyer, accountant, or both for guidance.

The business will decide on a name and establish its goals. The business is then registered with the state, province, or federal government. A name can be trademarked, but the procedure is different.

A firm is not required to issue shares to divide the company, but it may do so if it chooses to. The articles will explain how to accomplish this. To determine how the company should expand and how it might be organized in the future, the lawyer or accountant would often consult with the company’s directors.

Directors of the company are given along with their contact details. Additionally, a company address is given.

The director(s) must approve any changes to the articles of organization.

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