Company Law: The Company's Constitution

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• Approximately 6.5% of private companies are still incorporated under the CA 1985, though it has been repealed and replaced by the CA 2006.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.