Articles Of Association v. Shareholders Agreement – The Conundrum

The rights and obligations of investors against other shareholders and/or the company may range from rights with regard to the transfer of shares ("Share Transfer Rights") to the inter-se governance matters relating to the ownership of shares - such as affirmative votes, pre-emption rights, and call/put option rights ("Inter-se Governance Rights"). Our focus here is India's position, as of October 2020, on the enforceability of additional, non-conflicting rights in the shareholders agreements ("SHA") vis-à-vis the articles of association ("AoA"). What prompts our concern is that investors need to be aware that while the SHA provisions keep changing to keep abreast of change in shareholdings or shareholders, the said changes are not always reflected in the AoA, which may cloud their better judgment and be to their detriment. (The reason for this anomaly is that the efforts to amend the AoA/denial by the company to be involved in Inter-se Governance Rights would be