S S Shet 22 August 2017

Reference of fixed commission in articles of association

Hi LawyersClub Team,

We are offloading 15% stake in a company with a deal that the new proposed Company’s management would reimburse us with 15% of revenues as Commission for offloading our stake.

We need your guidance whether we can incorporate this point (i.e. receivables of 15% of revenues as Fixed Commission) in the Articles of Association document through SPICe e-AoA [Form INC 34] or this needs to be done through MoU Agreement (kindly correct me if I am using the wrong verbiage to describe the Agreement name). Further, if it can be done only through MoU Agreement, can this be registered at a sub registrar office (Karnataka) by paying the applicable stamp duty and registration fees.

Requesting your inputs on the above query

Thanks & Regards,

S G Shet

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2 Replies

Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 23 August 2017

Agreement and incorporation both must be done. Since Articles of Association of a Company is subordinate to the Memorandum of Association of Company which lays down the rules and regulations for the company’s internal management. The AOA provides for powers to the Company for tis management by the Board and authority of the members to regulate the conduct of the company. Hence, articles of association are regulations of the company binding on the company and on its shareholders. In this article, we mainly look at the new SPICe AOA or the eAOA.

S S Shet 23 August 2017

Hi Rama Sir,

Thanks for your reply. My doubt is whether we can incorporate this point on the fixed commission in the Articles of Association (SPICe eAoA) file; or do you mean to say that even a separate Agreement needs to be executed (even after referring in the AoA).

Thanks & Regards,

S G Shet