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The company's constitution (Articles of association (The articles may…
The company's constitution
A company's constitution includes the company's articles and any agreements and resolutions such as special resolutions and other resolutions that required agreement by all of the members in order to be effective
Prior to the introduction of CA2006, the memorandum of association was a far more significant document for companies incorporated in England
Articles of association
Section 18 of CA2006 states that
A company must have articles of association prescribing regulations for the company
Unless it is a company to which model articles apply, it must register those articles
Articles of association registered by a company must be contained in a single document and must be divided into paragraphs numbered consecutively
A companies articles of association are concerned with the internal regulation of the company and in the UK must be registered under the authority of an Act of Court in the Register of Companies
If the company's articles are annexed to the instrument of incorporation, as is usual practice, when the application is made to the court for permission to register the instrument of incorporation, the articles may be registered with the instrument of incorporation under the authority of the same Act of Court
The Court/ Register of Companies shall not authorise the registration of the company's articles unless there has been an application to the Court/Registrar made in the name of all the company's founder members and the articles are signed by the founder members with a statement of their names and addresses, the signature being made in the presence of and attested by a witness, usually a solacer, whose name and address shall also be stated
The articles may include the following topics
Issue and transfer of shares and any restrictions of share transfers
Alternation of share capital
Procedures at directors' meetings
Appointment of directors
Removal of directors
Number of directors
Alternate directors
Powers of directors
Remuneration of directors
Procedures at members' meetings
Calling general meeting
Variation of rights
Winding up of the company
Appointment of a liquidator
Company administrators will refer to the articles on a regular basis to ensure that meetings are quorate and to determine the answers to basic questions
If the articles define the division of powers between the members and directors, then it is important to know the their terms are interpreted
Model articles
Companies are free to draft their own articles but CA2006 provides default sets of model articles for different companies.
These articles will automatically apply to companies that do not register their own articles and will in any event apply to the extent that any registers articles do not exclude or modify the relevant model articles
Memorandum of association
This document sets out the basic constitution of the company, defines the characteristics of the company's personality and is sometimes termed the external document of the company or the powers of the company
Likely to contain
Name clause
A private company whether limited by shares or guarantee must end its name with the word Limited or Ltd
Registered Office Clause
The actual address is not usually listed (except for BVI companies) because the company has not yet been incorporated
There will be a statement evidencing where the registered office is situated
Objects clause
Sets out the aims and purposes of the company
Nowadays the clause will usually state the objets and powers of the company are not restricted
Capital clause
States the amount of the company's authorised share capital and its divisions into specific classes or shares
Limited liability clause
Will state that shareholders are only liable for the amount of their unpaid shares
Common signature of the company
Will usually include the seal of the company or the authorised signatory list of the company, as changed from time to time
The subscribers each of whom should subscribe for at least one share must sign the memorandum of association
Scott v Frank F Scott (London) Ltd (1940)
Bratton Seymour Service Co Ltd v Oxborough (1992)
Imperial Hydropathic Hotel Co Blackpool v Hampson (1882)
Automatic Self Cleansing Filter Syndicate Co Ltd v Cuninghame (1906)