(THE
COMPANIES ACT, 2013)
(COMPANY
LIMITED BY SHARES)
A R
T I C L E S O F A S S O C I A T I O N
O F
_______________________________ PRIVATE LIMITED
PRELIMINERY
1. Table 'F' (Articles of Association of a company limited by
shares) incorporated in Schedule I to the Companies Act, 2013 as amended and as
applicable shall apply to the Company subject to such
exemptions,
modifications, adaptations, additions, deletions, alterations, changes made hereinafter
and any statutory modification or re-enactment for the time being in force at
any subsequent point of time.
INTERPRETATION
2. In these regulations, unless the
context otherwise requires, expressions defined by the Companies Act, or any
statutory modification thereof in force at the date on which these regulations
become binding on the company, shall have the meanings so defined.
3. In these regulations-
(a) "Act" means the Companies Act, 2013 as amended and
the rules made by the Central Government for carrying out the provisions of the
Act including any statutory modification or re-enactment for the time being in
force.
(b) “Approval of company” means
approval of members in general meeting.
(c) “Articles” and “Memorandum” means regulations incorporated in
Articles of Association and Memorandum of Association respectively.
(d) “Board” means Board of
Directors for the time being of the Company.
(e) "Company" or “private
company” means ____________________ Private Limited
(f) "Directors" means the director of the company and
includes person occupying the position of the director by whatever name, he may
be designated or called such as managing director, whole time director or
director for the time being of the Company.
(g) “Gender
and number “unless there is anything repugnant in the subject or context, words
importing the masculine gender shall be taken to include females, and words in
the singular shall include the plural, and vice versa.
(h) “Managerial Personnel” means managing director, whole time
director or manager.
(i) “Meeting” means the general meeting, extra-ordinary general
meeting or annual general meeting of the members of the company.
(j) “Members” mean shareholders
of the company and vice-versa
(k) "Office" means the
registered office of the company.
(l) “ROC” and “MCA” means the Registrar of Companies (ROC) and
Ministry of Corporate Affairs (MCA) respectively.
(m) The threshold limits contained hereinafter shall stand
modified automatically by statutory modifications or re-enactment thereof, for
the time being in force, at any point of time.
PRIVATE
COMPANY
4. The Company is a private
company within the meaning of Section 2(68) of the Companies Act, 2013 and
accordingly:-
(i) The right to transfer shares
in the Company is restricted in the manner and to the extent hereinafter
appearing.
(ii) The number of members of the Company shall be limited to two
hundred
Provided that where two or more persons hold one or more shares in
the Company jointly, they shall, for the purposes of this clause be treated as
a single member,
Provided further that
(A) persons who are in the employment of the Company; and
(B) persons who, having been formerly in the employment of the
company, were members of the company while in that employment and have
continued to be members after the employment ceased, shall not be included in
the number of members; and
(iii) No invitation to the public
to subscribe for any securities of the company shall be made.
PROMOTERS
5. The first
directors of the company are as under who are also
promoters of the company within the meaning of sub-section (69) of section 2 of
the Act-
(a) Shri_____________________________
(b) Shri ______________________________
(c) Shri ______________________________
(d) Shri ______________________________
INCORPORATION
OF COMPANY AND MATTERS INCIDENTAL THERETO
6. Section 9 of the Act dealing with
effect of registration: It is not necessary and mandatory for a private company
to have common seal. The common seal for a private company is made optional. Therefore,
wherever the words “common seal” occur in the Act, it shall be treated as
omitted for a private company as the company has exercised its option not to have
common seal. It shall be sufficient
legal compliance if the document that requires common seal as per mandate of
the Act is signed by the two directors or by one director and by a company
secretary, if any.
7. Section 13 of the Act dealing with
alteration of company: the company may alter the provisions of its memorandum.
8. Notwithstanding anything contained in section 14 of the
Act dealing with alteration of articles, the Board is empowered, if any
difficulty arises in giving effect to any provision of the Act that requires
the authorization of the articles, to alter the articles not inconsistent with
the provisions of the Act as appear to Board to be necessary or expedient for
removing the difficulty. Every resolution of the Board in this regard shall be
e-filed with the ROC along with a copy of altered articles and the matter shall
be placed in the next general meeting held thereafter for ratification by the
members. This compliance shall not be treated as ultra vires
the provisions of the Act.
SHARE CAPITAL
9. The authorised share capital of the company shall
be of such amount that may be from time to time provided in Memorandum of
Association of the company with the power of alteration thereof.
10. Section 43 and 47 of the Act dealing with
kinds of share capital and voting rights shall not be applicable to the
Company. However, the company may issue non-voting
right equity shares including preference shares.
11. Subject to the provisions of the Act and these Articles, the
shares in the capital of the company shall be under the control of the
Directors who may issue, allot or otherwise dispose of the same or any of them
to such persons, in such proportion and on such terms and conditions and either
at a premium or at par and at such time as they may from time to time think
fit.
12. No common seal is required to be affixed on share
certificate and the share certificate shall be signed by any two directors or
by one director and by the company secretary, if any and shall specify the
shares to which it relates and the amount paid-up thereon.
13. Subject to the provisions of section 55 of
the Act, the Board shall have power to issue preference shares.
14. The Board shall have power to decline
to register any transfer or transmission of securities without assigning any
reasons thereof under section 56 of the Act.
15. Subject to the provisions of
section 62, the time limit of acceptance of offer as stipulated in section
62(1)(a)(i) of the Act and dispatch of notice for offer as mentioned in section
62(2) of the Act can be reduced if 90 (ninety) percent of the members give
their consent either in writing or through electronic mode. However, the time
limits cannot be increased but it can only be reduced.
16. Subject to the provisions of section 63, the Board shall have power to issue bonus shares.
17. Subject to the provisions of section 66, the Board shall have power to reduce share capital.
18. Section
67 of the Act is not attracted to the company as per exemption notification
dated 05-06-2015 issued by MCA applicable to a private limited company if the
company fulfills the following threshold limits
(a) In whose share capital no other body
corporate has invested any money;
(b) If the borrowings of such a company from
banks or financial institutions or anybody corporate is less than twice its
paid up share capital or fifty crore rupees, whichever is lower; and
(c) Such
a company is not in default in repayment of such borrowings subsisting at the
time making transactions under this section.
19.
Subject to the provisions of sections 68 to 70, the company may purchase its
own shares or other specified securities.
ACCEPTANCE OF DEPOSITS BY COMPANY
20. Under
section 73 of the Act as modified by exemption notification dated
05-06-2015 issued by MCA, applicable to
Private Limited Company, the company can accept deposits from the Members up to
100% of aggregate of its paid up share capital and free reserves without making
compliance of the provisions contained in clauses (a) to (e) of sub-section (2)
of section 73 of the Act with regard to issuance of Circular, filing of
circular with ROC, maintaining deposit repayment reserve, providing
deposit insurance. Such company shall file the details of monies so accepted to
the Registrar in such manner as may be specified.
MANAGEMENT
AND ADMINISTRATION
21. Section 96 regarding
annual general meeting says that the first annual general meeting shall be held
within a period of nine months from the date of closing of the first financial
year of the company and in any other case, within a period of six months, from
the date of closing of the financial year. Provided further if a company holds
its first annual general meeting as aforesaid, it shall not be necessary for
the company to hold any annual general meeting in the year of its
incorporation.
22. Section 101 of the Act dealing with notice of meeting, a
general meeting of a company may be called, convened and held by giving lesser
than clear twenty-one days’ notice either in writing or through electronic
mode. A general meeting may be called by giving a shorter notice of twenty one
days and it is not necessary to obtain the consent of ninety-five per cent of
the members entitled to vote for giving shorter notice of general meeting.
23. It is not necessary to issue the notice of every meeting
of the company to the auditor or auditors of the company as contemplated by
section 101(3) (b) of the Act.
24. Section 102 of the Act dealing with explanatory
statement shall not apply to a private company. It is not necessary to annex to
the notice calling general meeting an explanatory statement in respect of items
of special business.
25. Section 103(1) (b) of the Act dealing with quorum for
general meeting: Two members personally present shall be the quorum for a
meeting of the company.
26. Section 104 (2) of the Act dealing with election of the
chairman on poll shall not apply to a private company. No member is entitled to
demand poll for election of the chairman of the general meeting.
27. Section 105 of the Act dealing with proxies is not
applicable to the company.
28. Section 106 of the Act dealing with restriction on voting
rights is not applicable to the company.
29. Section 107 of the Act dealing with voting by show of
hands: The voting on a resolution at any general meeting shall be decided only
on show of hands
30. Section 109 of the Act dealing with demand for poll is
not applicable to the company and no member is entitled to demand poll for
voting on any resolution.
31. Section
117 (3)(g) of the Act dealing with resolutions passed in pursuance of
sub-section (3) of section 179 of the Act to be filed with ROC is not applicable to the company as per exemption
notification dated 05-06-2015 issued by MCA applicable to a private limited
company. No person is entitled under section 399 of the Act to inspect or
obtain copies of such resolutions.
DECLARATION AND PAYMENT OF DIVIDEND
32. Section 123 of the Act says that the company is not entitled
to declare dividend unless carried over previous losses and depreciation not
provided in previous year or years are set off against profit of the company
for the current year.
33. Section
124(6) of the Act dealing with unpaid dividend says that all shares in respect
of which dividend has not been paid or claimed for seven consecutive years or
more shall also be transferred by the company in the name of Investor Education
and Protection Fund. In case any dividend is paid or claimed for any year
during the aforesaid period of seven consecutive years, the share shall not be
transferred to Investor Education and Protection Fund.
ACCOUNTS OF COMPANY
34.
Section 128 of the Act dealing with books of account says that the company
shall prepare and keep at its registered office books of account and other
relevant books and papers and financial statement for every financial year
which gives a true and fair view of the state of affairs of the company. In
case the books of account are kept at other place, the company shall, within
seven days, file with the Registrar a notice in writing giving the full address
of that other place. The books of account not less than eight financial years
shall be kept in good order.
AUDIT
35. Section 139 of the Act says that the first Auditor of the
Company shall be appointed by the Board of Directors within one month from the
date of registration of the Company and the Auditors so appointed shall hold
office until the conclusion of the first Annual General Meeting. At first annual General Meeting the Company
shall appoint an Auditor to hold Office from the conclusion of the Meeting till
the conclusion of its sixth Annual General Meeting and thereafter till the
conclusion of every six meeting. The
remuneration of the Auditor shall be fixed by the Company in the Annual General
Meeting or in such manner as the Company in the Annual General Meeting may
determine.
DIRECTORS
36. Section
160 of the Act dealing with right of persons other than retiring directors to
stand for directorship is not applicable to the company as per exemption
notification dated 05-06-2015 issued by MCA applicable to private limited
company.
37. Section
162 of the Act dealing with appointment of directors to be voted individually is
not applicable to the company as per exemption notification dated 05-06-2015
issued by MCA applicable to a private limited company.
38. Section
166 of the Act dealing with duties of directors says that:
(a) A director shall act in accordance with the
articles of the company
(b) A director shall act in good faith and in the
best interest of the company, its shareholders, employees and the community and
protection of environment.
(c) A director shall exercise duties with due and
reasonable care, skill and diligence and shall exercise independent judgment.
(d) A director shall avoid situations of conflict
of interest. In cases of such conflicts, the director shall
disclose the same to the Board.
(e) A director shall not achieve or attempt to
achieve any undue gain or advantage either to himself or his relatives,
partners or associates.
(f) A director shall not assign his office and any
such assignments made shall be void.
BOARD
39. Section 173 of the Act regarding meetings
of Board prescribes that every company shall hold the first meeting of the
Board of Directors within thirty days of the date of its incorporation and
thereafter hold a minimum number of four meetings of its Board of Directors
every year and not more than one hundred and twenty days shall intervene
between two consecutive meetings of the Board.
40. Section 174 of the Act regarding quorum
for meetings of Board says that the quorum for a meeting of the Board of Directors
of a company shall be one-third of its total strength or two directors,
whichever is higher.
41. General Powers of the managing director, whole time
director
The
management of the business of the Company shall be vested in the directors,
who, in addition to the powers and authorities by these Articles or otherwise
expressly conferred upon them, may exercise all such powers and do all such
acts, things, matters, deeds, as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be exercised or
done by the Company in general meeting, but subject nevertheless to the
provisions of the applicable statutes and of these Articles, and to any
Articles from time to time made by the Company in general meeting; provided
that no Article so made shall invalidate any prior act of the directors, which
would have been valid if such Article had not been made.
Without restricting the
generality of the provisions of above Article and without prejudice to the
general powers conferred thereby and the other powers conferred by these
Articles, it is hereby expressly declared that the directors shall have the
following powers, that is to say, power from time to time-
+ To take such steps as they
think fit to carry into effect any agreement or contract made by or on behalf
of the Company.
+ The Directors shall have the power to open bank accounts, to
sign cheques on behalf of the Company and to operate all banking accounts of
the Company and to receive payments, make endorsements, draw and accept
negotiable instruments, hundies and bills or may authorise any other person or
persons to exercise such powers.
+ To pay the costs, charges and expenses,
preliminary and incidental to the promotion, formation, establishment, and
registration of the Company.
+ To purchase, or otherwise
acquire, for the Company any property, rights or privileges which the Company
is authorized to acquire, and at such price and generally on such terms and
conditions as they think fit.
+ To
negotiate, to move application for allotment of immovable properties for any
purposes, to enter into agreement, to sign application form, documents,
Conveyance Deed, Sale Deed and to do all
such acts, things, deeds as may be deemed necessary, ancillary and incidental
in connection with purchase and sale of real estate / immovable properties and
to delegate such powers to any whole time director or any officer of the
company.
+ To sign
and execute all agreements, undertakings, applications, returns, papers,
receipts, all documents relating to excise, customs, VAT, income tax and all
other document(s) including agreements relating to the purchase, as also sale
of Company’s products which require authentication in the name and on behalf of
the Company and to do all or any of the acts, deeds, matters and things as may
be considered expedient and necessary on behalf of the Company.
+ To appear and act on behalf of and represent the Company in all
matters before Central Government, State Governments and similar other
authorities, public bodies, public officers, local self-government bodies, and
all Government Officers and Officers of the
Municipalities, local development authorities and to sign and execute all applications,
returns, objections, documents, agreements and papers that may be required for
and on behalf of the Company in or in relation to any matter in which it is
interested or may be concerned in any way.
+ To pay for
any property, rights, or privileges acquired by, or services rendered to the
Company.
+ To secure
the fulfillment of any contracts or arrangement entered into by the Company in
such other manner as they may think genuine and reasonable.
+ To appoint, remove or suspend,
such experts, managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from time to
time think fit, and determine their powers and duties, and fix their salaries
or emoluments, and require security in such instances and to such amounts as
they think fit.
+ To accept from any member
insofar as the law permits, and on such terms and conditions as shall be agreed
upon, a surrender of the shares of the member or any part thereof.
+ To appoint any person or
persons, whether incorporated or not, to accept and hold in trust for the
Company any property belonging to the Company, or in which it is interested,
and for any other purposes, and execute and do all such deeds and things as may
be requisite in relation to any such trust, and provide for the remuneration of
any such trustee or trustees.
+ To institute, conduct, defend,
compound, or abandon, any legal proceedings by or against the Company, or its
officers, or otherwise concerning the affairs of the Company, and also to
compound and allow time for payment or satisfaction of any debts due, and of
any claims or demands by or against the Company.
+ To refer
any claims or demands by or against the Company to arbitration, and observe and
perform the awards. + To make and give receipts, releases and other discharges for money payable to the Company and for claims and demands of the Company.
+ To determine who shall be
entitled to exercise the borrowing powers of the Company and sign on the
Company's behalf, bonds, debentures or other securities, bills, notes,
receipts, acceptances, assignments, transfers, hypothecations, pledges,
endorsements, cheques, drafts, releases, contracts, agreements and all other
instruments and documents.
+ To provide for the management
of the affairs of the Company in India or abroad in such manner as they think
fit, and in particular appoint any persons to be the attorneys or agents of the
Company with such powers, including power to sub-delegate, and upon such terms
as may be thought fit.
+ To invest and deal with any of
the moneys of the Company not immediately required for the purposes thereof
upon such securities and in such manner as they think fit, and from time to
time to vary or realize such investments.
+ To set aside out of the profits
of the Company before declaring any dividend, such sums as they think proper as
a reserve fund to meet contingencies, or for repairing, improving and
maintaining any of the property of the Company and for such other purposes as
the directors shall in their absolute discretion think conducive to the
interests of the Company, and invest the several sums so set aside upon such
investments, as they may think fit, and from time to time deal with and vary
such investments, and dispose of all or any part thereof for the benefit of the
Company.
+ To
take decision for instituting and defending legal proceedings and to institute
and defend legal proceedings- civil, criminal or revenue, including Income-tax,
VAT and Excise and withdraw, compromise, compound or refer any matter or
dispute to arbitration, as they may think fit.
+
To sign, verify and file in any court or in any
office in any case, whether original or appellate, revision or review
petitions, plaints, complaints, written statements, affidavits, applications,
statutory returns and memoranda of appeals or cross objections.
+ To engage and appoint advocates, vakils,
solicitors, pleaders and mukhtiars, as the case may be.
+ To realize and collect all outstanding and
claims of the Company and to give effectual receipts and discharges.
+ To employ
or retain a solicitor or solicitors
+ To incur such expenditure for the conduct
of the business of the Company such as payment of salary to staff, rents for
the building, electricity and water charges etc. and such other incidental
expenses directly or indirectly related with the business of the company as he
may deem necessary and proper.
+ To sub-delegate all or any
powers hereby conferred to other officer of the Company.
+ To make, vary and repeal,
by-laws, regulations for the smooth carrying on the business of the Company, or
of its officers and servants, or the members of the Company, or any section or
class thereof.
+ To enter into all such
negotiations and contracts and rescind and vary all such contracts, and execute
and do all such acts, deeds, things and
matters in the name and on behalf of the Company as they may consider expedient
for or in relation to any of the matters aforesaid or otherwise for the purpose
of the Company.
+ To provide for the management
of the affairs of the Company in such manner as they shall think fit.
42.
Section 179(3) of the Act lists the following powers to be exercised by the
Board on behalf of the company by means of resolutions passed at the meetings
of the Board, namely-
(a) To
make calls on shareholders in respect of money unpaid on their shares;
(b) To authorize
buy-back of securities under section 68 of the Act;
(c) To
issue securities, including debentures, whether in or outside India;
(d) To
borrow monies;
(e) To
invest the funds of the company;
(f) To
grant loans or give guarantee or provide security in respect of loans;
(g) To
approve financial statement and the Board’s report;
(h) To
diversify the business of the company;
(i)To
approve amalgamation, merger or reconstruction;
(j) To take over a company or acquire a
controlling or substantial stake in another company;
(k) Any
other matter which may be prescribed.
43. Section
180 of the Act regarding restriction on power of Board is not applicable to the
company as per exemption notification dated 05-06-2015 issued by MCA applicable
to private limited company. Accordingly, the Board may exercise the following
powers without the consent of the company/shareholders in general meeting-
(a) To
sell, lease or otherwise dispose of the whole or substantially the whole of the
undertaking of the company;
(b)To
invest otherwise in trust securities the amount of compensation received by it
as a result of any merger or amalgamation;
(c) To
borrow money, where the money to be borrowed, together with the money already
borrowed by the company will exceed aggregate of its paid-up share capital and
free reserves, apart from temporary loans obtained from the company’s bankers in
the ordinary course of business;
(d) To remit or give time for the repayment of
any debt due from a director.
44.
Section 184 of the Act dealing with disclosure of interest by director: Every
director shall, at the first meeting of the Board in which he participates as
director and thereafter at the first meeting of the Board in every financial
year or whenever there is any change in the disclosures already made, then at
the first Board meeting held after such change, disclose his concern or
interest in any company, body corporate, firms which shall include the
shareholding.
45.
Section 184(2) of the Act-Every director who is concerned or interested in a
contract or arrangement entered into with a body corporate in which such
director holds more than two per cent shareholding of that body corporate or is
a promoter, chief executive officer of that body corporate or with a firm or
other entity in which such director is a partner, owner or member, shall disclose
the nature of his concern or interest at the meeting of Board in which the
contract or arrangement is discussed and after disclosure of interest, such
interested director shall participate in such meeting of the Board.
46. Section
185 of the Act dealing with loan to directors is not applicable to the company as
per exemption notification dated 05-06-2015 issued by MCA applicable to a
private limited company if the company fulfills the following threshold limits_
(a) In whose share capital no other body
corporate has invested any money;
(b) If
the borrowings of such a company from banks or financial institutions or body
corporate is less than twice of its paid up share capital or fifty crore
rupees, whichever is lower; and
(c) Such
a company has no default in repayment of such borrowings subsisting at the time
of making transactions under this section.
47.
Section 186 dealing with inter-corporate loan and investment: The Board is, by
means of unanimous resolution, empowered
to give loan or make investment up to its sixty percent of its paid up share
capital, free reserves and securities premium account or one hundred per cent
of its free reserves and securities premium account, whichever is more and in
excess thereof, prior approval by means of a special resolution passed at a
general meeting shall be taken. The need of obtaining Central Government’
approval has been dispensed with. Prior approval of public financial
institution shall be required if there is default in repayment of loan
instalments or payment of interest thereon. No loan shall be given at a rate of
interest lower than the prevailing yield of Government Security.
48.
Section 188 of the Act dealing with related party transactions read with Rule 15 of Companies (Meetings of Board and its
Powers) Rules, 2014, inter-alia, mandates a prior approval of the members by resolution in case sale, purchase or
supply of any goods or materials exceeds 10% of the turnover or rupees 100
crore, whichever is lower. Further where the transactions are entered into in
the ordinary course of business and at arm’s length then members’ approval is
not required. According to sub-section 3 of section 188 of the Companies Act,
2013, the transaction needs to be ratified by the Board or shareholders within
three months of such transaction. If the member is a related party, he is
entitled to vote on such resolution to approve any contract or arrangement
which may be entered into by the company with such related party. No
resolution is required to be passed in case of related party transactions
are made between holding and wholly owned subsidiaries. In case of a private limited
company, the definition of related parties under Section 2(76)(viii) does not
include holding company, subsidiary
company, associate company, fellow subsidiaries.
MANAGERIAL PERSONNEL
49.
Sub-sections (4) and (5) of Section 196 of the Act dealing with appointment of
managing director, whole time director or manager is not applicable to the
company as per exemption notification dated 05-06-2015 issued by MCA applicable
to a private limited company.
Accordingly, managerial personnel can be appointed in a private limited
company by the Board without obtaining the approval of shareholders in general
meeting and without complying with the Schedule V of the Act and without
obtaining the approval of Central Government. It is also not necessary to
mention the terms and conditions of appointment and remuneration of the
managerial personnel in the board resolution and no need to e-file the return
in the prescribed form with ROC.
WINDING
UP
50. Winding up when necessary
will be done in accordance with the requirements of the Companies Act, 2013 or
statutory modification thereto.
SECRECY
51. Subject to the provisions of law of land and the Act, every
manager, auditor, trustee, member of a committee, officer, servant, agent accountant
or other persons employed in the business of the company shall, if so required
by the Board of Directors before entering upon his duties, sign, declaration,
pledging himself to observe strict secrecy respecting all transactions of the
Company with its customers and the state of account with individuals and in
matters relating thereto and shall by such declaration pledge himself, not to
reveal any of the matters which may come to his knowledge in the discharge of
his duties except when required to do so by the directors or by any court of
law and except so far as may be necessary in order to comply with any of the provisions
in these presents.
INDEMNITY
52. Every officer of the company
shall be indemnified out of the assets of the company against any liability
incurred by him in defending any proceedings, whether civil or criminal, in
which judgment is given in his favour or in which he is acquitted or in which
relief is granted to him by the court or the Tribunal.
|
SI.
No.
|
Name,
Address,
Description
and
Occupation
of each
Subscriber
|
Signature
of
each
Subscriber
|
Names, Addresses,
Descriptions
and
Occupations of
Witnesses
|
|
1.
2.
|
|
sd/-
sd/-
|
Sd/-
SHRI SATISH NEMANI
S/o Shri _____________
26/36, Birhana Road
Kanpur
(Chartered Accountant)
|
Place: KANPUR dated this: _________
day of ______________________
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