SGS 4: Company Constition

Question 1

What are the five steps of the legality test?

Answer 1

● Act silent?
● Complete freedom?
● Min/max threshold in the Act?
● Act default where articles are silent
● Outright prohibition?

Question 2

What happens if the AoA are incompatible?

Answer 2

• The act prevails

Question 3

What is the no objects clause - explain its compatibility?

Answer 3

a. s28(1) – transfers objects clause from company’s mem > AoA
b. s21(1) – can amend AoA .: compatible
c. s31(1) – unless otherwise specified in AoA, objects will be unrestricted

Question 4

LEGALITY TEST

Is notice for BM likely to pass the legality test?

Answer 4

• It depends.
• The minimum time period is 14 days
• so only compatible if MORE than 14 days.

Question 5

LEGALITY TEST

Is quorum for BMs going to pass the legality test?

Answer 5

• Compatible

- Because the CA is silent

Question 6

LEGALITY TEST

What happens if the Chairman has no casting vote for BMs?

Answer 6

• Compatible

- Because the CA is silent

Question 7

LEGALITY TEST

What happens if there is large collective board spending that requires shareholder approval?

Answer 7

• Compatible because the CA is silent

Question 8

LEGALITY TEST

Directors can change company name - would this pass the legality test?

Answer 8

• D’s CAN change company name
• Under s77(1)(b)
• But this must comply with s79.

Question 9

LEGALITY TEST

Does changing the articles of association pass the legality test?

Answer 9

• Incompatible

- The CA states that this requires a SR - s21(1)

Question 10

LEGALITY TEST

Unanimity from shareholders to remove a D - would this pass the test?

Answer 10

• Incompatible
• Only via Ordinary Resolution - s168(1)
• Does not require or permit qualification
• But the Articles of Association might include a Bushell v Faith clause

Question 11

LEGALITY TEST

Can the Directors appoint company secretary?

Answer 11

• Compatible

- S270(1) - private company is not required to have a secretary.

Question 12

LEGALITY TEST

Can the Quorum for SH meeting be fixed to number of SHs in the company?

Answer 12

• This varies
• Depends on the number of members
• > 1 member - s318(2): quorum of 2 subject to AoA. Compatible
• Single member - s318(1) - quorum at 1 without qualification so clause would be incomptible

Question 13

LEGALITY TEST

Would the rule for no written resolutions be allowed, would this pass the legality test?

Answer 13

• Incompatible

- S300 - states that any article preventing the use of Written Resolutions is void.

Question 14

How are common alterations to AoA made?

Answer 14

• By SR - s21

- Where the MA amended - must send copy of amended AoA to Companies House, within 15 days - s26