Please enable JavaScript.
Coggle requires JavaScript to display documents.
chapter 5 :Company Constitutions - Coggle Diagram
chapter 5 :Company Constitutions
INTRODUCTION
The Memorandum and Articles of
Association ( M&A ) are the primary legal
document of a company
the company will conduct its daily business
the contents must not infringe or over-ride
any of the provisions s of the Companies
Act, 1965 or any other relevant legislation.
CONTENTS OF MOA
The basic requirements are set out in
section 18(1) which requires the
memorandum of a company to state:
the name and objects of the company
company limited by shares, the amount of share capital of the company
company limited by shares, that the liability of the members is limited
company limited by guarantee, that the liability of the members is limited and the amount that each member undertakes to contribute in the event of its being wound up
unlimited company that the liability of the members is unlimited 6. the full name, addresses and occupations of the subscribers
Need to Lodge MoA
-This is implicit in section 16(1) which
requires the memorandum to be lodged
with the Registrar before a company can
be registered.
-The subscribers to the memorandum must sign on the memorandum and their signatures must be witnessed by a person who is not himself a subscriber.
Constructive Notice as to MoA
-A person dealing with a company is deemed to have read the registered documents and considered to have understood them. -Constructive notice – e.g. legal advertisement in newspaper.
Conflict between MoA and AoA
The MoA can override and overrule any provisions of the
AoA which may be at variance with it.
CONSTRUCTION OF MOA
-Nothing in the MoA must contradict the provisions of the Act, unless a contrary intention is provided by the Act itself. -A statutory contract binding between the company and its members qua members and between the members inter se.
OBJECT CLAUSE INTRODUCTION
.
-Legal personality of a comp for purposes stated in the MoA
-Types of activities or businesses.
-Validly do in its capacity only such things as are within its objects and things
reasonably incidental thereto and are not prohibited by the law.
Doctrine of Ultra Vires
The phrase ultra vires has been used in various different senses in company law.
It is used to describe acts which are beyond the capacity of a company.
Describe acts which are not beyond the capacity of the company but simply carried out in excess or abuse of the powers of the company by its agents, particularly, the directors.
Describe acts which are within the capacity and powers of the company but are in violation or in excess of the articles.
Under English law any transaction which is made outside object clause will be void:
Sec. 20(2)(a) - Member of the company have right to take action against the company to restrain the performance of ultra vires act. - Sec. 20(2)(b) - Company or member of the company can take action against the officers of the company who authorised the ultra vires transaction. Sec. 20(3) - Member can claim for the damages and minister charge with the responsibility for companies may petition to wind up the company which entered into ultra vires transaction.
Legality of Object:
Forbidden by any law, defeat any law, fraudulent, immoral, opposed to public policy
How to avoid the ultra vires transaction?
-By alteration which by the company should alter its object clause to include the newly proposed business before undertaking it.
ARTICLES OF ASSOCIATION (AOA)
THE NATURE OF AOA:
-The articles of a company are its internal regulations.
-The regulations in the articles must be lawful.
-Articles conferring upon a company the power to buy its own shares, or to declare dividend out of its capital may be invalid.
-It is recognized articles cannot override and overrule any provisions in the memorandum.
-The articles of a company when registered are public documents and are open for inspection
CONTENTS OF AOA
the registered office
the exclusion, in part of Table
the execution or adoption of a pre-incorporation contract or preliminary agreement
classes of shares and variation of class rights
lien on shares
calls on shares and forfeiture for non payment of calls
transfer of shares
transmission of shares
alteration of share capital
reduction of share capital
general meetings of members
directors
accounts and audits
dividends and reserve funds
notices to members
winding up.
1st Director - Must be named in the MoA or AoA
1st Secretary - Must be named in the MoA or AoA.
Sec. 11(8) – Registrar may require the MoA or AoA to be amended if name of 1st Secretary is omitted. Form of AoA - Must be printed and divided in numbered paragraph
Companies Requiring AoA
-Limited by guarantee ,Limited both by shares and guarantee, Unlimited