SS2 Commerce Lesson Note on Articles of Association

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ARTICLES OF ASSOCIATION

This is the document containing the regulations governing the internal management of the company’s affairs, duties, rights and powers of the members. It is also a document in which the internal regulations of Limited Liability Company are stated.

The contents of an article of association include:

1. The method of issue of capital
2. Methods of holding meetings
3. Defined powers and duties of directors
4. The right of shareholders
5. How directors are to be elected
6. How auditors are to be remunerated
7. Method of sharing dividend
8. Transfer and forfeiture of shares
9. Method of audit
10. Method of settling dispute.
11. Procedure for winding up the company in the event of liquidation.

Certificate of registration or incorporation

This is the document which confers legal status on the company to commence business. It is issued by the registrar of companies as evidence that all the requirements of the Acts in respect to registration have been met by the company.

It contains the following information:

1. The name of the company
2. The company registration number
3. A statement showing that the company has been registered in accordance with the law
4. The signature of the registrar

Prospectus

This is a circular, or an invitation or advertisement made by a company to the public, inviting them to subscribe in a company’s shares.

It contains the following information:

1. Brief history of the company
2. Information about the present position and future prospect
3. The purpose of the issue
4. The amount of the capital offered for subscriptions
5. The terms of the issue
6. Three to five years audited accounts
7. Profiles of the major shareholders
8. Profiles of the company’s directors
9. Profiles of the company management team

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