The Constitution of the Company Flashcards
What is the primary purpose of a company’s constitution?
To establish the foundational framework for its operation, management, and the relationship between shareholders, directors, and the company itself.
What are the key components of a company’s constitution?
The Articles of Association and, historically, the Memorandum of Association.
What does Section 33 of the Companies Act 2006 establish?
A statutory contract between the company and its members based on the articles of association.
What are Model Articles?
Default rules for companies incorporated under the Companies Act 2006, which apply unless amended.
How are Model Articles categorized under the Companies (Model Articles) Regulations 2008?
Into articles for private companies limited by shares, private companies limited by guarantee, and public companies.
What is the role of the Articles of Association?
To govern a company’s internal rules, outlining the roles, powers, and responsibilities of directors and shareholders.
What case established that directors may act against shareholder preferences within their management authority?
Howard Smith Ltd v Ampol Petroleum Ltd [1974].
What section of the Companies Act 2006 allows shareholders to remove directors?
Section 168.
What are preemption rights?
Contractual rights allowing existing shareholders to purchase additional shares before they are offered to others to prevent ownership dilution.
What section of the Companies Act 2006 requires public companies to hold AGMs?
Section 336.
What is the significance of Hickman v Kent or Romney Marsh Sheep-Breeders’ Association [1915]?
It clarified that provisions in the articles governing member-company relations are enforceable.
What case recognized member-to-member enforceability in quasi-partnership companies?
Rayfield v Hands [1960].
Which case ruled that a member could not enforce an article promising him a solicitor role?
Eley v Positive Government Security Life Assurance Co [1876].
What does Salmon v Quin & Axtens Ltd [1909] establish?
Members can enforce provisions that affect their rights as shareholders.
What are shareholder agreements?
Contracts setting additional governance arrangements, particularly in private companies, beyond the articles of association.
Which case upheld the enforceability of shareholder agreements?
Puddephatt v Leith [1916].
What is the rule established in Foss v Harbottle [1843]?
Individual members cannot sue for wrongs done to the company; only the company itself can sue.
What case allowed members to enforce personal voting rights?
Pender v Lushington [1877].
What case restricted enforcement of procedural breaches to the company?
Mozley v Alston [1847].
How can a company alter its articles of association?
By passing a special resolution with at least 75% approval under Section 21 of the Companies Act 2006.
What principle was established in Allen v Gold Reefs of West Africa Ltd [1900]?
Amendments to articles must be made in good faith for the benefit of the company as a whole.
What is the effect of entrenched provisions in the articles?
Entrenched provisions can only be altered with specific conditions under Section 22 of the Companies Act 2006.
What section of the Companies Act 2006 governs class rights and their variation?
Sections 630–635.
What is the ‘good faith’ requirement for altering articles?
Amendments must benefit the company as a whole and not unfairly prejudice specific members.