Constitution Of Companies Flashcards
What is the primary legal document governing a company’s operations?
The Constitution (for LTDs) or Memorandum & Articles of Association (for DACs).
What are the two types of Constitutions under the Companies Act 2014?
Single-document Constitution (for LTDs).
Memorandum & Articles of Association (for DACs & other companies).
What does the Constitution regulate?
It governs the company’s legal capacity, shareholder rights, and internal management.
What type of Constitution does an LTD have?
A single-document Constitution (Section 19 CA 2014).
What are the key contents of an LTD’s Constitution?
Name Clause – Must include “Limited” (LTD) (Section 26).
Company-Type Clause – States it is a private company limited by shares.
Liability Clause – Members’ liability is limited.
Capital Clause – States share capital (if included).
Association Clause – Confirms the company formation agreement.
Where must the Constitution be filed?
With the Companies Registration Office (CRO).
What document proves a company’s legal existence?
The Certificate of Incorporation (Section 25 CA 2014).
What are the effects of registration?
The company becomes a separate legal entity.
It has perpetual succession.
It can enter contracts, own property, sue & be sued.
What is required under Section 43 CA 2014?
Every company must have a common seal.
How does a DAC differ from an LTD?
DACs must have a Memorandum & Articles of Association.
DACs must have at least 2 directors.
DACs have an Objects Clause, restricting their activities.
What must a DAC’s name include?
“Designated Activity Company” (DAC) or “d.a.c.” (Section 969 CA 2014).
What are the key clauses in a DAC’s Memorandum?
Name Clause – Must state the company’s name.
Objects Clause – Defines permitted business activities (Section 967).
Liability Clause – Limits members’ liability.
Share Capital Clause – States share capital details.
Association Clause – Confirms members’ agreement to form the company.
What happens if a DAC acts beyond its Objects Clause?
The act is ultra vires but not void (Section 973 CA 2014).
What do the Articles of Association regulate?
Internal governance (e.g., voting rights, director duties).
Rules on meetings, dividends, share transfers, etc.
What happens if the Articles conflict with the Memorandum?
The Memorandum prevails (Roper v Ward [1981]).
How can a DAC alter its Memorandum?
By special resolution (75% approval) (Section 974 CA 2014).
How can shareholders challenge an alteration?
If they hold at least 15% of shares, they can apply to court within 21 days.
What are the limitations on altering the Articles?
Changes must be legal (cannot contradict CA 2014).
Changes must be bona fide and in the company’s best interest (Allen v Gold Reefs Ltd [1900]).
Who is bound by the company’s Constitution?
The company is bound to members.
Members are bound to the company.
Members are bound to each other.
Can the Constitution be enforced by non-members?
No – outsiders cannot rely on it (Eley v Positive Government Co [1876]).
Do LTDs have an Objects Clause?
No – they have full capacity to act like a natural person (Section 38 CA 2014).
Can a DAC act beyond its Objects Clause?
No, but the act is not void (Section 973 CA 2014).
What was decided in Ashbury Railway Co v Riche (1875)?
A company’s ultra vires acts were unenforceable.
What rights can members enforce under Section 31?
Members can enforce personal rights under the Constitution.
They can sue the company if their rights are breached.
