What are Articles of Association?

Articles of association, also known as AoA, is a legal document that states the rules and regulations of a business. The document also outlines the company’s purpose as well as how certain tasks should be handled, such as how directors should be appointed and how to handle various financial records. Simply put, articles of association can be considered a user’s manual for a company or business’s operations. Since articles of association serve as a standard outline for how a business operates, they are deemed an essential resource in business law.

Key Takeaways

• Articles of association or AoA is a document that states the rules and regulations of how a certain business operates.
• Generally, articles of association can be thought of as a user’s manual for a company.
• Each jurisdiction has its own requirements regarding what must be included in an article of association.

Importance of Articles of Association

There are many challenges to running a business, and you may encounter a number of problems along the way. This is why it is so important to have a set rule book to refer to whenever you run into issues with your business. Moreover, articles of association generally lead to government recognition of your company or business. In other worlds, the document serves as the primary source government authorities need in order to separate a company’s legal identity from its stakeholders.

What is Included in Articles of Association?

When it comes to what should and should not be included in articles of association, each state has its own rules and regulations. Nevertheless, let’s review some of the most basic components that should be included in articles of association:

• Basic details about the company such as the names and addresses of the company itself, agents and owners.
• Details about distribution of power within the company, including members of the executive management and hierarchy of employees.
• Information regarding the purpose of the company, its main goals and how these objectives should be achieved.
• Records of director and shareholder meetings and decisions are typically included, as well as financial and accounting records.
• Guidelines for the procedures and protections when it comes to distributing dividends and issuing or transferring company shares.
• If relevant, the AoA may contain information about the company’s capital structure via common shares.

Bottom Line

Have you recently started a new business? Aside from registering your intellectual property rights, establishing articles of association is one of the first steps you can take to start claiming legal recognition for your company. It should be noted, however, the articles of association are complicated, legal documents that require professional attention. Seek assistance in creating your articles of association from one of our top-tier business law attorneys. We look forward to helping you create an AoA that properly reflects your businesses goals, values, and purpose.