The Company's Constitution Flashcards
What are a company’s constitutional documents?
1) The Articles of Association
2) The Memorandum (pre-2006)
What was the effect of memorandum pre-2006?
- Formed part of constitution
- Restrictions were put here
- Required an objects clause
What is an objects clause?
Setting out purpose for which company is formed. Acting outside = ultra vires
What is the effect of memorandum post CA 2006?
- Unrestricted objects clause
Is objects clause still in force?
Only if company was formed pre-2006 and Articles not amended to remove it
What are examples of provisions included in Articles of Association?
- Number of directors required to transact business
- Method of appointment of directors
- Power of directors
- How board meetings are conducted
- Any special rights attaching to shares
- How shareholder meetings are conducted
- How and to whom shareholders may transfer their shares
What is the minimum provisions legality test?
Company may make Articles more onerous - but some things not weaker (e.g. right to poll vote)
How can Articles be amended?
Special resolution
What is an entrenched provision?
One which can only be amended / repealed if specific conditions are met
Do the Articles act as a contract between the company and its members?
Only in capacity as a member (e.g. cannot add clause saying will be Company’s solicitor forever)
Are Articles a contract between the members themselves?
Conflicting authority - if member accepts personal obligation to another through Articles, this is enforceable. Otherwise, no.
