36. Model constitution

Question 1

36. Model constitution

Answer 1

General overview
[36.01] The new s 36 makes it clear that the model constitution prescribed by Act No 36 of 2014 applies to private companies and companies limited by guarantee. This is a vast change from the old s 36(1) which provided that the articles in Table A may be adopted by public companies and unlimited liability companies. A lacunae may arise in the law by virtue of the repeal of s 36(2) as explained below.

Question 2

Applicability of Table A by default

Answer 2

[36.02] The old s 36(2) provided for the adoption of Table A by default, and in so far as the company’s articles did not exclude or modify any of the regulations in Table A, those regulations in Table A shall apply.

[36.03] Act No 36 of 2014 introduces model constitutions for specified types of companies defined as private companies and companies limited by guarantee: s 36 and the Companies (Model Constitutions) Regulations 2015. However, there is no provision that these model constitutions shall apply by default. Historically, a certificate of incorporation will be issued when the memorandum and articles are, inter alia, lodged with the registrar: s 19. Table A shall apply by default if no articles are lodged: s 36(2). Legally speaking, it means that the company has to formally adopt the model constitution (which contains the regulations) as its constitutional documents. If the company does not do so, then the regulations contained in the model constitution may arguably not apply. On the other hand, this issue may be a legal nicety because the practice of the registrar is to issue the certificate of incorporation based on the model constitution (containing the regulations) which has to be lodged by the company pursuant to s 37. It is not contemplated that the registrar will issue a certificate of incorporation in respect of a company that has not adopted the model constitution or does not have the model constitution.

Question 3

Public companies and unlimited liability companies

Answer 3

[36.04] The model constitutions do not apply to these two types of companies. Hence, companies of such nature will have much leeway to craft their own constitution to suit their business needs and circumstances.