Please enable JavaScript.
Coggle requires JavaScript to display documents.
Constitution of Company (Memorandum & Articles of Associations) -…
Constitution of Company
(Memorandum & Articles of Associations)
Absence of constitution
Only company limited by guarantee & public listed companies must have constitution
Rights, powers, duties, obligations of directors & members shall be guided by CA2016
Adoption of constitution
Pass Special resolution
Lodge a copy of constitution with ROC within 30 days of adoption
Content
Objects (object clause) - Nature of biz
Capacity, rights, powers, privileges of company
Matters required by CA2016
Others matter company wishes to include
Legal effect of constitution
Binds company to members
Company cannot deny the members of their rights
[ Wood v Waterworks Co ] company must follow the procedure of paying dividend laid down in the constitution
Binds members to company
If constitution provided that disputes between co and members should be be settled outside the court, then members must follow
Not a contract between company and outsiders
Member cannot argue with company on matters unrelated to his membership
Binds members to each other
Binds company and members as if they has been signed and sealed by each member
Alteration of constitution
By company
Pass special resolution (not necessarily in a meeting)
Lodge a copy of special resolution with ROC within 30 days after passing special resolution
By court
Director/ member may apply to court for an order to alter & amend constitution
When passing a special resolution would result in a deadlock
Limitation
Not contravene with provisions of CA
Member can't be removed by alteration, to subscribe for additional shares or to accept increased liability w/o members written consent
Certain conditions applicable to private company cannot be altered
Alteration to vary the rights attached to a class of shares may only be made if the right provedure has been followed
Alternation must be made bona fide for the benefit of the company as a whole (shouldn't discriminate minority)
Object clause
If constitution states the objects of the company, company will be restricted from carrying biz not within the objects
Contract entered by company outside its object clause
Ultra Vires transaction
Legal Effect
Rights of third party
Cannot be said to have known the co's object clause
Can assumes co has full capacity to undertake the business
Can enforce the contract eventhought they're unware of co's lack of capacity
Company is bound, cannot use the lack of capacity as a defense to avoid contract
Rights of company
Company can sue director for not acting for a proper purpose when he authorized ultra vires transaction
Alteration of object clause
Special resolution (If nature of biz is stated in constitution)
BOARD resolution w/o member's consent (If nature of biz not stated)
No person shall be deemed to have notice/knowledge of the contents of constitution due to the fact that constitution has been registered by ROC