Company Law: The Company's Constitution

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Questions and Answers

What does the company's constitution primarily represent?

A guideline for market strategies.

A financial report submitted to authorities.

A contract between the company and shareholders. (correct)

A collection of shareholders personal agreements.

Which of the following is NOT a key aspect of the company's constitution?

Regulating market competition. (correct)

Setting rules for company governance.

Stating the current share capital.

Evidencing the existence of the company.

How can a company change its constitution?

At the discretion of the board of directors.

By a government mandate.

By shareholder consensus only.

Through provisions specified in the articles of association. (correct)

What is one of the legal documents that the company's constitution includes?

Articles of association. Signup and view all the answers

What does the current share capital indicate?

Amount invested by shareholders in shares. Signup and view all the answers

Which section of the CA 2006 defines the company's constitution?

Sections 17, 29, and 32. Signup and view all the answers

What role does the company's constitution play between shareholders?

Defines the contractual obligations among themselves. Signup and view all the answers

What document is essential for a company’s formation under the Companies Act 1985?

Memorandum of association. Signup and view all the answers

Which type of articles can a private company formed before 1 October 2009 have if it has not changed its articles since that date?

Table A unamended with clauses from an old-style memorandum Signup and view all the answers

What must a company provide to a shareholder upon request according to s 32 of the CA 2006?

An up-to-date copy of the company’s articles Signup and view all the answers

What happens if a company fails to provide requested constitutional documents?

The officers of the company may face fines. Signup and view all the answers

Which option is a requirement for adopting unamended model articles since 1 October 2009?

The adoption must be made by a special resolution. Signup and view all the answers

If a private company formed between 1 October 2007 and 1 October 2009 has not changed its articles, which option is valid for its articles?

Unamended Table A 2007 with old-style memorandum clauses Signup and view all the answers

Which constitutional documents are shareholders entitled to request?

A copy of the latest statement of capital Signup and view all the answers

What distinguishes amended Table A 2007 from unamended Table A 2007 for a private company formed in the specified timeframe?

Only amended Table A requires approval by special resolution. Signup and view all the answers

What must occur for bespoke articles to be valid after 1 October 2009?

They must consider changes in the CA 2006 and be adopted by special resolution. Signup and view all the answers

Which company act formed the basis for the majority of private companies currently in existence?

Companies Act 2006 Signup and view all the answers

What important change occurred to the memorandum of association with the introduction of the CA 2006?

The memorandum's importance diminished and became less significant. Signup and view all the answers

How many main clauses comprised the old-style memorandum under the CA 1985?

Five Signup and view all the answers

What has happened to the clauses of old-style memorandums due to the CA 2006?

They are now treated as provisions of the articles. Signup and view all the answers

What does the liability clause in the old-style memorandum state?

The liability of the members is limited. Signup and view all the answers

What procedure must shareholders follow to change the liability clause now included in the articles due to the CA 2006?

Pass a special resolution under s 21 of the CA 2006. Signup and view all the answers

What implication does the impact of the CA 2006 have on companies established under the CA 1985?

The treatment of their constitutional documents has changed. Signup and view all the answers

What is the status of the Companies Act 1985 as of 2023?

It has been repealed, but still applies to some companies. Signup and view all the answers

What does Section 31 of the CA 2006 allow a company to do regarding its objects?

Limit its objects if it chooses to do so Signup and view all the answers

Under the CA 2006, what is typically true about the objects of a company formed after 1 October 2009?

Companies can have unrestricted objects Signup and view all the answers

What is the consequence if a company acts outside its objects clause established before 1 October 2009?

Directors may face breach of duty claims Signup and view all the answers

What must a company do when it amends its articles to add or change its objects clause?

File Form CC04 with the Registrar of Companies Signup and view all the answers

If a company chooses to restrict its objectives, what must it do according to Section 21 of the CA 2006?

Pass a special resolution to amend its articles Signup and view all the answers

What is the usual scenario for companies formed under the CA 2006 with respect to their objects?

They operate under unlimited and unrestricted objects Signup and view all the answers

What change occurred on 1 October 2009 regarding the objects clause of existing companies?

It became part of the articles of association Signup and view all the answers

What action can shareholders take if directors act outside the company's objects clause?

Seek an injunction against the directors Signup and view all the answers

What is the purpose of Article 1 in the Table A articles of association?

Definitions Signup and view all the answers

Which of the following articles in Table A specifies company profits?

Articles 102-110 Signup and view all the answers

What key provision is omitted in the new model articles compared to Table A regarding shareholder meetings?

Holding of annual general meetings Signup and view all the answers

Which article number in Table A relates to winding up and indemnity?

Articles 117-118 Signup and view all the answers

What significant difference does the new model articles have regarding directors’ decisions compared to Table A?

Decisions can be made by majority or unanimous agreement Signup and view all the answers

Which of the following is a provision included in Table A that is omitted in the new model articles?

Chairperson's casting vote Signup and view all the answers

What does Article 37 of the new model articles focus on concerning meetings?

Only general meetings Signup and view all the answers

What is a major characteristic of board meetings in the new model articles compared to Table A?

Can be conducted via any method for communication Signup and view all the answers

Study Notes

The Company’s Constitution

Every company has a constitution: key documents that showcase the company’s existence, list its share capital, and outline its operational rules.
The constitution serves as a contract between the company (as a legal entity) and shareholders, and between shareholders themselves.
The company’s constitution is defined in sections 17, 29, and 32 of the CA 2006.
Companies incorporated under the CA 1985 and before October 1, 2009 may have different variations of the constitution, including unamended Table A, amended Table A, bespoke articles, or model articles.
Companies are required to provide shareholders with a copy of their constitution documents upon request, including articles of association, certificate of incorporation, and a statement of capital.
Failure to provide these documents can result in fines for company officers.
Approximately 6.5% of private companies are still incorporated under the CA 1985, though it has been repealed and replaced by the CA 2006.
CA 1985 companies have a significantly different constitution format, which is still relevant in practice due to the existence of these companies.
The memorandum of association used under the CA 1985 had a more significant role, encompassing essential aspects of the company, including its name, registered office, objectives, shareholder liability, and authorized share capital.
With the implementation of the CA 2006, the memorandum of association became less significant, and its key clauses transitioned into provisions within company articles.
The shareholders’ liability clause of the CA 1985 memorandum simply stated that liability is limited, and this transitioned to the company's articles.
Companies incorporated under the CA 2006 are not required to have an objects clause, allowing for unrestricted activities unless a special resolution is passed to add restrictions.
Under the CA 1985, the objects clause became part of the company's articles in 2009, potentially impacting directors if they act outside these restrictions.
Removing an objects clause from a CA 1985 company's articles can be done through a special resolution, allowing for a wider range of operational activities.
Companies formed under the CA 2006 have the option to restrict their objects through a special resolution.

Content of Table A Articles of Association

Articles of association define rules like share capital, shareholder meetings, board meetings, and company administration.
The old-style memorandum provisions were also incorporated into the company’s articles from October 1, 2009.

Key Differences: Model Articles vs. Table A

Model articles for private companies limited by shares differ from Table A in several ways, including:
- Explicitly stating the limitation of members’ liability (art 2)
- Only referring to 'general' shareholders’ meetings (art 37), unlike Table A's distinction between AGM and EGM
- No requirement for holding an AGM
- No specific notice provisions for shareholders’ meetings
- No chairperson’s casting vote provision in shareholders’ meetings
- No provision for written resolutions
- Allowing proxies to vote on a show of hands
- No provision for alternate directors
- No requirement for directors’ retirement by rotation
- Specifying that directors' decisions are made by majority or unanimity
- Permitting unanimous director decisions through various methods, including outside formal meetings
- Relaxed rules about board meetings, allowing for communication methods where directors are not physically present.

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Description

This quiz explores the essential elements of a company's constitution as defined by the Companies Act 2006. It covers the roles of the constitution in relation to shareholders and the requirements for providing constitutional documents. Test your understanding of these legal frameworks and their implications for company operations.