Section 5 of the Companies Act, 2013: Articles of Association (AOA)
Section 5 of the Companies Act, 2013 governs the Articles of Association of a company. The articles contain the internal regulations for management of the company and may also contain additional management provisions and valid entrenchment clauses.
What does Section 5 require?
Section 5(1) provides that the articles of a company shall contain the regulations for management of the company. Section 5(2) further requires the articles to contain prescribed matters, while permitting a company to include additional matters considered necessary for its management.
- Management regulations: The AOA sets out rules governing the company's internal management.
- Prescribed and additional matters: The articles may include prescribed provisions as well as additional management provisions suited to the company.
- Entrenchment: Specified provisions may be made harder to alter than by the ordinary special-resolution threshold, subject to Section 5.
- Applicable form: The articles are to follow the relevant model in Tables F, G, H, I or J of Schedule I, as applicable.
- Adoption of model regulations: A company may adopt all or any of the regulations contained in the applicable model articles.
Entrenchment provisions under Section 5(3) to 5(5)
An entrenchment provision makes alteration of a specified article subject to conditions or procedures more restrictive than those applicable to a special resolution. Under Section 5(4), entrenchment may be included at formation. It may later be introduced by an amendment agreed to by all members of a private company, or by special resolution in the case of a public company.
Where the articles contain entrenchment provisions, notice must be given to the Registrar in the prescribed form and manner. Current MCA incorporation documentation through SPICe+ specifically asks whether the AOA is entrenched and requires the relevant article numbers and entrenchment details.
Model Articles under Schedule I
| Schedule I Table | Company type |
|---|---|
| Table F | Company limited by shares |
| Table G | Company limited by guarantee and having share capital |
| Table H | Company limited by guarantee and not having share capital |
| Table I | Unlimited company and having share capital |
| Table J | Unlimited company and not having share capital |
Under Section 5(7), a company may adopt all or any of the regulations in the model articles applicable to it. For a company registered after commencement of the 2013 Act, Section 5(8) generally causes applicable model regulations not excluded or modified by the registered articles to operate as if contained in the registered articles.
What is the practical role of Articles of Association?
The AOA is the company's principal internal governance document. Depending on the company and the applicable law, it commonly addresses matters such as share capital and calls, transfer and transmission of shares, general meetings, voting, directors and Board proceedings, dividends, accounts and other internal administration.
The articles must be read subject to the Companies Act, 2013. In particular, Section 6 gives the Act overriding effect where the memorandum, articles, agreements or resolutions are inconsistent with the Act. Alteration of articles is principally governed by Section 14 of the Companies Act, 2013.
Section 5(9): Companies registered under previous company law
Section 5 does not apply to the articles of a company registered under a previous company law unless those articles are amended under the Companies Act, 2013.
Official legal resources
For the authoritative statutory text and current filing system, refer to the Ministry of Corporate Affairs - Companies Act, 2013, India Code, and the MCA portal. The MCA SPICe+ guidance is relevant when preparing incorporation documents and reporting entrenchment in the AOA.