Corporater Constitution Flashcards
What constitutes a company’s corporate constitution under the Companies Act 2006?
A company’s constitution includes the articles of association, any resolutions agreed upon by all members (s.29 CA 2006), and any agreements deemed constitutional under s.17 CA 2006.
What is the function of a company’s articles of association?
The articles govern the company’s operation, covering aspects such as director appointments, shareholder meetings, voting procedures, share capital, and the distribution of dividends.
Under s.31 CA 2006, what is the default position regarding corporate objects?
Companies are presumed to have unrestricted objects unless specified otherwise, giving them flexibility in conducting business.
What principle did Howard Smith Ltd v Ampol Petroleum Ltd [1974] establish about directors’ discretion?
Directors may exercise management powers even against the wishes of the majority of shareholders, provided they act within their authority and duties.
What are the Model Articles of Association, and how are they applied?
Model Articles are default constitutional documents provided under s.20 CA 2006 and the Companies (Model Articles) Regulations 2008, applying unless companies adopt customized articles.
How does s.33 CA 2006 describe the legal status of a company’s constitution?
The constitution binds the company and its members as though it were a contract between them.
What was the key holding in Hickman v Kent or Romney Marsh Sheep-Breeders’ Association [1915]?
The articles of association bind the company and members only in their capacity as members, not in other capacities such as directors.
What distinguishes a breach of personal rights from an internal irregularity in company law?
A breach of personal rights affects specific shareholder entitlements, whereas internal irregularities involve procedural matters affecting the company as a whole.
How can articles of association be amended under s.21 CA 2006?
Articles can be amended by a special resolution requiring at least 75% of the votes cast in a general meeting.
What is an entrenchment provision under s.22 CA 2006?
A provision requiring stricter conditions or procedures than a special resolution for altering specified parts of a company’s articles.
What is the Duomatic principle established in Re Duomatic [1969]?
A company is bound by informal unanimous agreements of its voting members, provided the agreement is intra vires.
What limits exist on amending a company’s articles, as stated in Allen v Gold Reefs of Africa Ltd [1900]?
Amendments must be bona fide for the benefit of the company as a whole and not conflict with statutory provisions.
What are shareholder agreements, and how do they interact with the corporate constitution?
Shareholder agreements are private contracts among shareholders or between shareholders and the company, supplementing but not overriding the articles.
What was the ruling in Russell v Northern Bank Development Corp Ltd [1992] regarding shareholder agreements?
Agreements among shareholders to limit company powers are enforceable between the parties but not binding on the company itself.
What case established that articles can act as a contract between shareholders inter se?
Rayfield v Hands [1960], where the court recognized an enforceable contract between shareholders within a quasi-partnership structure.
How do special resolutions differ from ordinary resolutions under CA 2006?
Special resolutions require at least 75% approval, while ordinary resolutions pass with a simple majority.
How does the case of Shuttleworth v Cox Bros Ltd [1927] define the limits of altering articles?
Amendments must be made in good faith and for the company’s benefit, with courts reluctant to interfere unless no reasonable person would agree with the change.
What are the advantages of shareholder agreements?
They allow enforceable contractual rights among shareholders, flexibility in governance, protection of sensitive matters, and remedies for breaches.
What role does s.24 CA 2006 play in limiting amendments to articles?
It prevents amendments that impose new financial obligations or require shareholders to take additional shares without their consent.
What issue arose in Bushell v Faith [1970] regarding weighted voting?
The court upheld a provision in the articles that gave weighted voting rights, making director removal effectively impossible, as it did not contravene statutory requirements.
What case established that amendments to articles must be for the benefit of the company as a whole?
Allen v Gold Reefs of Africa Ltd [1900], where the court stated amendments must be bona fide and not exceed their powers.
Under s.32 CA 2006, what is the obligation regarding constitutional documents?
Companies must provide their constitutional documents, including articles of association, to any member upon request.
What was the decision in MacDougall v Gardiner [1875] regarding internal irregularities?
The court ruled that procedural disputes (like a chairman ignoring a poll request) are internal irregularities, and only the company can enforce them.
What is the significance of Pender v Lushington [1877] in enforcing personal rights?
The court allowed a shareholder to enforce voting rights as a personal right when a chairman improperly disallowed nominee votes.
