Explain the following: The important points a Company Secretary has to adhere while drafting Article of Association of a public limited company.

Answer 2(a) Important points the Company Secretary has to adhere to while drafting the Articles of Association of a public limited company Utmost care is required to be taken to draft the Articles. It should contain strictly only relevant and necessary matters. In its draft, all efforts must be made to incorporate comprehensive provisions so as to cover all statutory requirements and all possible contingencies. Any alteration requires a cumbersome procedure to be followed, which is both expensive and time-consuming. Articles, as a public document of the company, have evidentiary value in matters that involve dealings of the company with its own members or third parties. Any outsider has constructive notice of the contents of the Articles and is expected to inspect before entering into any transaction with the company. Articles must be signed by the subscribers of the Memorandum and be registered along with the Memorandum. Articles shall be divided into paragraphs numbered consecutively. This will help the company to alter the articles conveniently. Some important points which a Company Secretary should bear in mind while drafting the Articles are as follows: Share capital, its kinds rights attached to different kinds of shares or any special privileges attached thereto should be considered and incorporated in the Articles. Directors appointment of directors, their voting rights, resignation, termination etc., should be given due consideration, and their rights, powers and privileges should be incorporated in the Articles. Proportional representation may also be looked into. In Government Companies, Joint Venture Companies, Joint Ventures with foreign companies, joint venture with Government Companies, the main terms of their partnership in Share Capital as well as the management of the affairs of the company with power and authority delegation be relevantly discussed in the Articles with scope and limitations thereto to avoid any misinterpretation. As far as possible, the regulation given in Table F may be borrowed, even if it is not made applicable, so that the Article may conform to the intent and spirit of the law. Efforts should be made to make each article self-explanatory and self-interpretative to avoid misleading conclusions. Coherence and sequence of the contents should be maintained at any cost. Any items that are already mentioned in the Memorandum and are to be mentioned in Articles, it is better that it is put in words such as "as mentioned in Memorandum of Association" which will skip the requirement of altering Articles when Memorandum is altered. No provision that a company cannot do either as per the Memorandum or the Companies Act or any other law, should find a place in articles: e.g. expulsion of members. This is opposed to Company Jurisprudence and is ultra vires of the Act. Where the company would require assistance from financial Institutions, provisions be made for the appointment of nominee directors, conversion of loans from financial institutions into equity, etc. Exemptions available to private companies by virtue of their Articles need to be suitably addressed in the Articles, as also the powers which can be exercised by the Board/Company only if the Articles contain provision to that effect. After drafting a proper balancing should be done with the Memorandum's contents, as to coverage, inconsistencies with it, contradictions occurred etc. to enable proper modification in time. It is better to have an Article of an existing company in the same field of activity, either to modify it or at least to know the relevant matters which can be included in the Draft.