The Company's Constitution

Question 1

What are a company’s constitutional documents?

Answer 1

1) The Articles of Association
2) The Memorandum (pre-2006)

Question 2

What was the effect of memorandum pre-2006?

Answer 2

• Formed part of constitution
• Restrictions were put here
• Required an objects clause

Question 3

What is an objects clause?

Answer 3

Setting out purpose for which company is formed. Acting outside = ultra vires

Question 4

What is the effect of memorandum post CA 2006?

Answer 4

• Unrestricted objects clause

Question 5

Is objects clause still in force?

Answer 5

Only if company was formed pre-2006 and Articles not amended to remove it

Question 6

What are examples of provisions included in Articles of Association?

Answer 6

1. Number of directors required to transact business
2. Method of appointment of directors
3. Power of directors
4. How board meetings are conducted
5. Any special rights attaching to shares
6. How shareholder meetings are conducted
7. How and to whom shareholders may transfer their shares

Question 7

What is the minimum provisions legality test?

Answer 7

Company may make Articles more onerous - but some things not weaker (e.g. right to poll vote)

Question 8

How can Articles be amended?

Answer 8

Special resolution

Question 9

What is an entrenched provision?

Answer 9

One which can only be amended / repealed if specific conditions are met

Question 10

Do the Articles act as a contract between the company and its members?

Answer 10

Only in capacity as a member (e.g. cannot add clause saying will be Company’s solicitor forever)

Question 11

Are Articles a contract between the members themselves?

Answer 11

Conflicting authority - if member accepts personal obligation to another through Articles, this is enforceable. Otherwise, no.