The Company's Constitution 2 Flashcards
When did the Companies Act come into force?
On 1 October 2009
What were companies governed by prior to the Companies Act 2006?
Companies Act 1985
What are the constitutional documents under the CA 1985?
1) Articles of Association
2) Memorandum
What are the constitutional documents under the CA 2006?
1) Articles of Association
What does Memorandum do in the CA 2006?
It simply amounts to a declaration of the company’s subscribers that they wish to form a company
What are a company’s subscribers?
The first members of the company
What does the memorandum in the CA 1985 require?
An objects clause
What is an objects clause in a memorandum?
The purposes for which the Company has been formed. Acting outside of this is ultra vires (outside Company Capacity)
Do companies formed under CA 2006 have an objects clause?
No, they have unrestricted objects unless stated otherwise in Articles
Does an objects clause continue for older companies even now?
Yes, it is still in force, until Articles of that company are amended
What is the purpose of the Articles?
To regulate relationship between directors, shareholders, company
What type of provisions are included in Articles?
- Number of directors to transact
- Number of directors for quorum
- Method of appointment of directors
- Powers of directors
- How board meetings are conducted
- Special rights attaching to shares
- How shareholder meetings are to be conducted
- How and whom shareholders may transfer their shares
What is the test on adjusting Articles?
They must comply with the minimum provisions of CA 2006 (the Legality Test)
Under what circumstances can a procedure in Articles be more onerous than CA 2006?
For example, the number of directors. CA 2006 requires 1, Articles can require 3.
Which CA 2006 provision overrides anything in Articles?
The right to demand a poll vote at GM – cannot be removed or varied
What are the choices of Articles that a Company has?
1) Model Articles (Table A)
2) Amended MA
3) Tailor made articles
How can Articles be amended?
Special resolution
What is the basic rule on altering Articles?
It must be made bona fide in the interests of the company as a whole
What is an Entrenched provision?
A provision which can only be amended / repealed if specific conditions are met, or if unanimous agreement, or by court order
What is the legal effect of Articles?
Binds the company and its members
Do the Articles act as a contract between the members themselves?
Typically, no. It is to be done through the Company.
How could shareholders keep each other in check if not through Articles?
Through shareholders agreement.
Can a shareholder always enforce any right in an Article?
Typically, only if they are relevant to his capacity as a member.
Can member enforce provision through themselves?
No, will be enforced through the company
