Which document states the rules regarding internal management of a company?

Articles of Association

The correct answer is option 2- Articles of Association.

Articles of Association are the rules regarding internal management of a company. These rules are subsidiary to the Memorandum of Association and hence, should not contradict or exceed anything stated in the Memorandum of Association. According to section 2(5) of The Companies Act, 2013, ‘articles’ means the article of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act. The articles of a company shall be in respective forms as specified in Table F, G, H, I and J in schedule I as may be applicable to such company. However, the companies are free to make their own articles of association which may be contrary to the clauses of Table F,G,H,I,J and in that case articles of association as adopted by the company shall apply.

OTHER OPTIONS-

• Memorandum of Association: Memorandum of Association is the most important document as it defines the objectives of the company. No company can legally undertake activities that are not contained in its Memorandum of Association. As per section 2(56) of The Companies Act, 2013 “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act. The Memorandum of Association contains different clauses.

• Consent of Proposed Directors: Apart from the Memorandum and Articles of Association, a written consent of each person named as a director is required confirming that they agree to act in that capacity and undertake to buy and pay for qualification shares, as mentioned in the Articles of Association.

• Statutory Declaration: A declaration stating that all the legal requirements pertaining to registration have been complied with is to be submitted to the Registrar with the documents for getting the company registered under the law.