What is the Articles of Association (AoA)?
In the Nepali language, Articles of Association (AoA) it’s called "नियमावली".
An AoA is a document that tells you the rules and regulations of your company. It's really important because it tells everyone what they're allowed to do and what they're responsible for.
It talks about things like who gets to make decisions and how meetings should be run.
When you register a company in Nepal, you have to give this document to the Company Registrar's Office and the Inland Revenue Department along with some other papers.
So, basically, an AoA is a very important document that tells you how to run your company.
Understanding the legal requirements
When you're going to write articles of association (AoA) for a company in Nepal, it's really important to know the laws and rules that apply.
The Company Act of Nepal, which is a law that talks about companies, gives a lot of information about what should be in the AoA.
Some of the most important things that have to be included in the AoA are:
- The name of the company
- What the company aims to do
- How many shares are there and how much are they worth?
- What are the rights and duties of persons owning shares
- How meetings will be organized and conducted
- How the directors of the company will be chosen and fired
- What the directors can and cannot do
- How the company will pay profits to shareholders
- How the AoA can be changed
Drafting the AoA
Once you have a clear understanding of the legal requirements, you can begin drafting the AoA.
It is important to consult with a lawyer or legal expert to ensure that the AoA complies with the laws and regulations in Nepal.
Here are some important steps to follow when writing the AoA.
1. Start with the name and objectives of the company
When naming a company, it's important to choose a unique name. The company's goals should also be clearly stated and should match the company's mission and vision.
2. Define the types of shares and share capital
When writing the AoA (Articles of Association), it's important to mention the types of shares that the company will offer, like ordinary shares or preference shares.
The AoA should mention the share capital of the company and the responsibilities and privileges of the shareholders.
3. Outline the rights and obligations of shareholders
The AoA (Articles of Association) should mention the responsibilities and privileges of the shareholders. This includes their right to vote, get a share of the profits (dividends), and their responsibility for the company's debts.
4. Establish the procedure for calling and conducting meetings
The AoA should mention the procedure for calling and conducting meetings, including the quorum requirements, the notice period, and the voting procedures.
5. Define the appointment and removal of directors
The AoA should specify the procedure for appointing and removing directors, including their qualifications, length of service, and pay.
6. Define the powers and duties of directors
The AoA should outline the powers and duties of the directors, including their role in managing the affairs of the company and their responsibility to the shareholders.
7. Establish the procedure for the distribution of dividends
The AoA should specify the procedure for the distribution of dividends, including the frequency and timing of payments.
8. Define the procedure for amending AoA
The AoA should specify the procedure for amending the articles of association, including the majority required to make changes and the notice period.
Review and approval
Once the AoA has been drafted, it is important to review and revise it carefully to ensure that it complies with the legal requirements and accurately reflects the company's objectives and policies.