22. Requirements as to constitution

Question 1

22. Requirements as to constitution

Answer 1

General overview
[22.01] This section lays down the requirements of the constitution of a company which used to be contained in the memorandum. The basic requirements are: the name of the company, the limited liability of the members in a company limited by shares, and in a company limited by guarantee, the members’ undertaking to be liable for the debts and liabilities of the company, the number of members with which the company is registered, the full names, addresses and occupations of the subscribers to the constitution of the company and the intention of the subscribers to take up the shares of the company.

Question 2

Constitution

• replace M&A. The two documents are now merged into one document called the “constitution”
• statutory contract amongst members of the company and between the company and its members

Answer 2

[22.02] Following the UK, Australian and New Zealand company law, Act No 36 of 2014 introduced an amendment where the constitution replaces the memorandum and articles of a company. The two documents are now merged into one document called the “constitution”. (Note: the New Zealand approach begins with a statutory structure, but allows contractual derogation from it. The UK, Australia and Singapore approach begin with a contractual structure which is given statutory force. Hence, s 39 of the Act provides that the constitution shall be a statutory contract amongst members of the company and between the company and its members. See the Report of the Steering Committee of the Companies Act, Chapter 5, paras 27–33, April 2011).

Question 3

Model constitutions

• for private companies (with variations for companies with only one director, and those with two directors or more), and for companies limited by guarantee
• no model constitution for public companies as it was thought that the constitution of such companies would be better determined by the relevant industries
• available on Acra website
• model constitution need not file a copy of that model constitution with ACRA.

Answer 3

[22.03] Model constitutions have been prescribed for private companies (with variations for companies with only one director, and those with two directors or more), and for companies limited by guarantee. The model constitution for private companies limited by shares and private companies limited by guarantee is provided by the Companies (Model Constitutions) Regulations 2015 which came into effect on January 3, 2016. However, there is no prescribed model constitution for public companies as it was thought that the constitution of such companies would be better determined by the relevant industries: see the Report of the Steering Committee of the Companies Act, Chapter 5, paras 32–33, April 2011. The model constitution is made available on ACRA’s website. Companies that adopt the model constitution need not file a copy of that model constitution with ACRA.

Question 4

Types of companies

Answer 4

[22.04] The Act provides for the following types of companies:

(a) companies limited by shares;
(b) companies limited by guarantee;
(c) unlimited companies; and
(d) public companies.

Question 5

Constitution as a statutory contract

Answer 5

[22.05] See s 39 which states that the constitution of a company shall form a statutory contract between the company and its members and amongst the members inter se.

Question 6

Subscribers to the constitution

- not liable to pay anything on the shares except in respect of calls made in the manner provided by the articles

Answer 6

[22.06] Subscribers to a company’s memorandum of association become, on its incorporation, members of the company in respect of the shares set opposite their names in the memorandum. They are not, in the absence of a special agreement, liable to pay anything on the shares except in respect of calls made in the manner provided by the articles