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What are Articles of Association?
Articles of association (AoA) is a legal document that outline the rules and regulations of a company or organization. These articles exist to explain the details of a company’s operations and also include financial records and information about key tasks that a company aims to complete. Articles of association also include financial records and details about any director appointments.
Purpose of the Articles of Association
Articles of association act as a user’s manual for a company’s operations. These articles give specific details about business dealings and can include tasks such as how to create a financial report or how to appoint new company directors.
Articles of association are helpful to business owners and employees because they provide a roadmap to operating a company on a day-to-day and overall basis.
Even though the general idea of articles of association are similar across all industries, differences do exist from company to company. When writing the incorporation documents, certain things like corporate bylaws , signing authority, and even shareholder’s agreement information must be taken into account.
Companies can ensure their articles of association encompass all the needed components as long as the full picture of day-to-day objectives are taken into account.
When it comes to investing and the stock market, articles of association are vital. Corporate lawyers help companies define how stocks and bonds will be issued, how dividends are distributed, and how the information is documented and shared within the company and beyond.
These documents are also a great place for companies to set weekly, monthly, or yearly goals and to create a specific pathway to reach them.
Check out this article to learn more about the purpose of articles of association.
What’s Included in Articles of Association
Each state has its own rules when it comes to what should be included in articles of association, but there are also many similarities. Successful articles of association go into detail about many different types of day-to-day procedures for a company and should be as specific as possible. Using this practice ensures that a pathway exists for any company operation and also helps to bring down the corporate veil, also known as the corporate shield.
Here is an in-depth look at what’s included in articles of association:
The first thing articles of association establish is the basic details regarding a few different entities in relation to a corporation. This typically includes the names and addresses of the parties, including:
- Company itself
- Applicable agents
Purpose and Duration of Purpose
Articles of association aim to outline the strategies for daily operations of a company on formal incorporation documents. The purpose of the company and the duration of that purpose is a big part of the store articles of association tell. This includes information about how a company is operated, governed, and who owns it.
Here are a few examples of a purpose that a company might cite in their AoA:
- Operation of a retail chain
- Provide lawn services to residential clients
- Manage stock portfolios
If a company is going into business for a limited amount of time, such as a seasonal, one-time objective, the date of expected completion must be noted. Companies can also list their duration as ongoing.
Distribution of Power
Corporations are made up of the people that run them. There is a hierarchy of workers at each one, starting with executive management, and trickling down to the employees that help run the operation. Articles of association define each role, and explains how power is distributed between each individual.
AoA documents include details about the organization of a company, such as the number of employees and directors. They also include information about the identities of any shareholders and founders of a company. Some even include details about advisors or auditors that are a part of the corporation.
Other Important Details
Since articles of association should be as all-encompassing as possible, there are several miscellaneous items that should be included in them. If any of the following apply to your company, you should include it in your articles of association:
- Member liability
- Decision records
- Attendance rosters and meeting minutes for general meetings
- Methods of communication
- Company seal use requirements
- Shareholder’s agreement
- Fiduciary duty details
- Type of stock issued
- How much stock issued
- How dividends are paid
Here is an article about what should be included in articles of association.
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When You Need Articles of Association
Articles of association are needed any time a new LLC is formed. Filing this legal document is a mandatory step toward establishing a new company. Until articles of association are filed with the state, the company is not recognized as a legal entity.
Until articles of association are filed, a company is not deemed “official.” It is also not wise to conduct business before they are created and filed, since these documents lay out the rules, regulations, and policies of the company’s day-to-day activities. AoA documents ensure that company personnel can stay compliant with these regulations, which avoids unnecessary bumps in the road later.
Here are a few more scenarios in which companies will need articles of association:
- Set up or open a new business bank account
- Apply for business loans
- Establish a legal identity with the government
- Separate personal assets from business ones
- Have a reference point for company rules and regulations
The only organizations that don’t require articles of association are sole proprietorships or partnerships, since they are considered to be legally established as soon as they conduct their first business transaction. If you are opening an LLC, there is no exception to this rule: you must file the articles of association for your new company before you begin to do business.
Find out more about when articles of association are needed at this link .
Articles of Association vs. Articles of Organization
Even though articles of association and articles of organization might sound similar, they have a several main differences. These two types of legal documents are filed based on what type of company is being opened.
Articles of Organization
Articles of organization are necessary to register corporations with their state government. These documents are required to bring new companies into existence and legitimize a company with the state it operates in. These documents notify the state government about the new corporation and provides specific details about the company, including information about the members and purpose of the organization.
Articles of Association
Articles of association are also formal documents that are filed to establish new limited liability companies. These documents include information such as company personnel details, stock offering amounts, and dividend payout information. Articles of association also define certain rule and regulations that companies will follow on a day- to-day basis.
To learn more about articles of association and articles of organizations and their differences, check out this link .
Get Help with Articles of Association
Are you ready to learn more about articles of association and what to include in them? You need the help of a corporate lawyer to help you through the process. Post a project on ContractsCounsel today to get connected with lawyers who specialize in articles of association.
Meet some of our Articles of Association Lawyers
I focus my practice on startups and small to mid-size businesses, because they have unique needs that mid-size and large law firms aren't well-equipped to service. In addition to practicing law, I have started and run other businesses, and have an MBA in marketing from Indiana University. I combine my business experience with my legal expertise, to provide practical advice to my clients. I am licensed in Ohio and California, and I leverage the latest in technology to provide top quality legal services to a nationwide client-base. This enables me to serve my clients in a cost-effective manner that doesn't skimp on personal service.
I am a 1984 graduate of the Benjamin N Cardozo School of Law (Yeshiva University) and have been licensed in New Jersey for over 35 years. I have extensive experience in negotiating real estate, business contracts, and loan agreements. Depending on your needs I can work remotely or face-to-face. I offer prompt and courteous service and can tailor a contract and process to meet your needs.
Tim advises small businesses, entrepreneurs, and start-ups on a wide range of legal matters. He has experience with company formation and restructuring, capital and equity planning, tax planning and tax controversy, contract drafting, and employment law issues. His clients range from side gig sole proprietors to companies recognized by Inc. magazine.
For over thirty (30) years, Mr. Langley has developed a diverse general business and commercial litigation practice advising clients on day-to-day business and legal matters, as well as handling lawsuits and arbitrations across Texas and in various other states across the country. Mr. Langley has handled commercial matters including employment law, commercial collections, real estate matters, energy litigation, construction, general litigation, arbitrations, defamation actions, misappropriation of trade secrets, usury, consumer credit, commercial credit, lender liability, accounting malpractice, legal malpractice, and appellate practice in state and federal courts. (Online bio at www.curtmlangley.com).
Real Estate and Business lawyer.
Davis founded DLO in 2010 after nearly a decade of practicing in the corporate department of a larger law firm. Armed with this experience and knowledge of legal solutions used by large entities, Davis set out to bring the same level of service to smaller organizations and individuals. The mission was three-fold: provide top-notch legal work, charge fair prices for it, and never stop evolving to meet the changing needs of clients. Ten years and more than 1000 clients later, Davis is proud of the assistance DLO provides for companies large and small, and the expanding service they now offer for individuals and families.
Braden Perry is a corporate governance, regulatory and government investigations attorney with Kennyhertz Perry, LLC. Mr. Perry has the unique tripartite experience of a white-collar criminal defense and government compliance, investigations, and litigation attorney at a national law firm; a senior enforcement attorney at a federal regulatory agency; and the Chief Compliance Officer/Chief Regulatory Attorney of a global financial institution. Mr. Perry has extensive experience advising clients in federal inquiries and investigations, particularly in enforcement matters involving technological issues. He couples his technical knowledge and experience defending clients in front of federal agencies with a broad-based understanding of compliance from an institutional and regulatory perspective.