Articles of Association
The Article of Association regulates behaviour, rights and powers of its subscribers.
The Articles of Association regulates the rights of the members of a company inter se among themselves and determine the manner in which the business of the company shall be conducted.
The articles also deal with such matters as the appointment and powers of directors, general meetings of the company, the voting rights of members, the transfer of shares, and dividends.
The legal effect of the Articles of Association of a company is well illustrated and depicted in Figure 2.2 for your understanding.
Figure 2.2 The legal effect of the Articles of Association
Section 29 with its various subsection of the Act states the requirements that are needed in the articles of association of a company.
Subsection 29(1) of the Act provides that where a company limited by shares, or a company limited by guarantee, or limited both by shares and guarantee, or an unlimited company be registered with the memorandum, the articles must be signed by the subscribers to the memorandum that prescribes regulations for the company.
Subsection 29(2) of the Act states that Articles shall be –
(b) divided into numbered paragraphs; and
(c) signed by each subscriber to the memorandum in the presence of at least one witness (not being another subscriber) who must attest the signature and add his address.
Subsection 29(3) of the Act provides that in the case of an unlimited company, if the company has a share capital, the articles shall state the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount.
Subsection 29(4) of the Act states that in the case of an unlimited company or a company limited by guarantee or a company limited both by shares and guarantee, the articles shall state the number of members with which the company proposes to be registered.
Subsection 29(5) of the Act provides that where a company to which subsection (4) applies increases the number of its members beyond the registered number it shall, within one month after the increase was resolved on or took place, lodge with the Registrar notice of the increase.
Subsection 29(6) of the Act provides that every company which makes default in complying with subsection (5) and every officer of the company who is in default in complying with that subsection shall be guilty of an offence against this Act. The penalty and default for an offence against this section is one thousand ringgit.
Rights of different class of shareholders
The rights of the different classes of the shareholders may also be found in the articles though not in Table A.
A company may have its own articles or may adopt Table A as set out in regulations.
However, a company, either public or private, may have its own or by implications its own company’s special articles. In such circumstance, the promoters of the company must expressly state in the first provision of the company that they wish not to apply Table A and that they wish to exclude the whole of Table A.
The requirements and layout in articles
1. The Articles must be printed not typewritten.
2. Articles must be divided into paragraphs and numbered consecutively.
3. The articles must also be signed by each person who subscribed to the memorandum, and the signature must be attended, though one witness ( not being a subscriber to the memorandum) for all the subscribers’ signatures is enough.
Adoption of Table A of Fourth Schedule
The Act provides that the articles of a company could adopt some or all regulations of Table A of Fourth Schedule as mentioned in Section 30.
Subsection 30(1) of the Act states that articles may adopt all or any of the regulations contained in Table A.
Section 30(2) of the Act provides that in the case of a company limited by shares incorporated after the commencement of this Act, if articles are not registered, or if articles are registered then so far as the articles do not exclude or modify the regulations contained in Table A, those regulations shall so far as applicable be the articles of the company in the same manner and to the same extent as if they were contained in registered articles.
| Activity 2.2
|Question to activity 2.2||Suggested answers to activity 2.2|