Company Articles and Company Constitution

229 Pages·2011·0.73 MB·English

by  Roger Mason

C
A Thorogood Special Briefing

COMPANY ARTICLES

AND COMPANY
CONSTITUTION

Roger Mason
A Thorogood Special Briefing
COMPANY ARTICLES
AND COMPANY
CONSTITUTION
Roger Mason
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THE AUTHOR
The author
Roger Mason is a Chartered Secretary and a Chartered Certified Accountant,
and a highly experienced company director and company secretary. His career
has included periods with the Ford Motor Company and ITC Entertainment Ltd,
as well as 14 years as Financial Director and Company Secretary of a leading
greetings card company.
Roger now presents seminars on company law, the duties of directors, the duties
of company secretaries and on financial topics. He has written 16 books.
A THOROGOOD SPECIAL BRIEFING iii

CONTENTS
Contents
The author iii
Introduction.................................................................................................xi
Important note concerning terms............................................................xii
1
THE EVOLUTION OF COMPANY ARTICLES
AND THE COMPANY CONSTITUTION 1
Introduction..................................................................................................2
Companies prior to 1844.............................................................................2
Company registration and the Joint Stock Companies Acts
of 1844 and 1856..........................................................................................3
Limited liability.............................................................................................4
Evolution from 1856 to 1985.......................................................................5
The Companies Act 2006............................................................................7
The number and types of companies........................................................7
Development of the constitution and articles...........................................8
The 1856 and 2006 model articles compared............................................9
2
THE CONSTITUTION 11
Introduction................................................................................................12
Definition of a company’s constitution....................................................12
Resolutions and agreements that are part of the constitution.............13
Registration of resolutions and agreements...........................................17
Resolutions and agreements to accompany all copies of the articles...18
3
THE NEW-STYLE MEMORANDUM AND
THE OLD-STYLE MEMORANDUM 19
Introduction................................................................................................20
The new-style memorandum....................................................................20
A THOROGOOD SPECIAL BRIEFING v
COMPANY ARTICLES AND COMPANY CONSTITUTION
The old-style memorandum......................................................................21
Companies registered before 1st October 2009.....................................22
Changes to the memorandum..................................................................22
Company name..........................................................................................23
Domicile......................................................................................................24
Objects clause.............................................................................................24
Authorised share capital...........................................................................26
Limited liability...........................................................................................26
Public company clause..............................................................................27
Entrenched provisions..............................................................................27
4
ARTICLES 29
Introduction................................................................................................30
The compulsion to have articles...............................................................30
The required form of the articles.............................................................30
The articles as a contract..........................................................................30
The purpose of articles..............................................................................31
The three options concerning articles.....................................................31
Model articles.............................................................................................32
Model articles as the default provision...................................................33
The relationship between articles and statutory law.............................35
The relationship between articles and shareholder agreements.........35
Authorised share capital...........................................................................36
Objects........................................................................................................36
The requirement to provide copies of the articles.................................36
Articles and the Interpretation Act..........................................................37
The latest model articles in context.........................................................37
Changing the articles and entrenchment of articles..............................41
5
CONSIDERATIONS WHEN CHANGING
THE ARTICLES 43
Introduction................................................................................................44
Dangers to be avoided..............................................................................45
vi A THOROGOOD SPECIAL BRIEFING
CONTENTS
MEMBERS’ MEETINGS AND WRITTEN RESOLUTIONS.............46
Annual general meetings..........................................................................46
Notice period for general meetings.........................................................47
Short notice of meetings...........................................................................47
Notice period for a special resolution.....................................................48
Proxies.........................................................................................................48
Quorum at a members’ meeting..............................................................49
Voting on a show of hands and polls......................................................50
Chairman of a general meeting and the chairman’s casting vote........51
Written resolutions of the members........................................................53
DIRECTORS................................................................................................53
Directors’ meetings...................................................................................53
Alternate directors.....................................................................................54
Minimum and maximum number of directors.......................................55
Removal and termination of directors....................................................55
Retirement of directors by rotation.........................................................57
Chairman of directors’ meetings and the chairman’s casting vote.....57
Directors’ duty to avoid conflicts of interest (CA2006 section 175).....57
Directors’ duty to declare interest in proposed transaction or
arrangement (CA2006 section 177)..........................................................58
Directors’ indemnity..................................................................................59
SHARE CAPITAL AND SHARES...........................................................59
Authorised share capital...........................................................................59
Partly paid shares......................................................................................60
Allotment of shares....................................................................................60
Purchase of own shares............................................................................61
Redeemable shares....................................................................................61
Transfer of shares......................................................................................61
OTHER MATTERS.....................................................................................62
Provision for the death of all the directors and members....................62
Age and other discrimination..................................................................63
Objects........................................................................................................63
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COMPANY ARTICLES AND COMPANY CONSTITUTION
Electronic and website communication with members........................64
Failure to notify contact details................................................................64
6
HOW ARTICLES AND THE COMPANY NAME
ARE CHANGED 65
Introduction................................................................................................66
A piece of advice........................................................................................66
Another piece of advice............................................................................67
The way that articles are changed...........................................................67
Considerations for listed companies.......................................................68
Variation in class rights.............................................................................69
Change of company name........................................................................69
Example of special resolution to alter articles........................................72
Example of special resolution to adopt new articles.............................72
Example of special resolution for change of name of company..........72
Example of written special resolution to alter articles..........................72
Example of certified copy of written special resolution
for Companies House................................................................................74
7
REVIEW OF MODEL ARTICLES FOR
PRIVATE COMPANIES 75
Introduction................................................................................................76
Liability of members (Article 2)................................................................77
Directors’ powers and responsibilities (Articles 3-6)............................77
Decision making by directors (Articles 7-16)..........................................78
Appointment of directors (Articles 17-20)..............................................81
Shares (Articles 21-29)..............................................................................83
Dividends and other distributions (Articles 30-35)................................85
Capitalisation of profits (Article 36).........................................................85
Organisation of general meetings (Articles 37-41)................................86
Voting at general meetings (Articles 42-47)............................................87
Administrative arrangements (Articles 48-51).......................................89
Directors’ indemnity and insurance (Articles 52-53).............................90
Model articles for private companies limited by guarantee.................91
viii A THOROGOOD SPECIAL BRIEFING
CONTENTS
8
REVIEW OF MODEL ARTICLES FOR
PUBLIC COMPANIES 93
Introduction................................................................................................94
Liability of members (Article 2)................................................................94
Directors’ powers and responsibilities (Articles 3-6)............................95
Decision-making by directors (Articles 7-19).........................................96
Appointment of directors (Articles 20-24)..............................................98
Alternate directors (Articles 25-27).......................................................100
Organisation of general meetings (Articles 28-33)..............................101
Voting at general meetings (Articles 34-40)..........................................103
Restrictions on members’ rights (Article 41)........................................104
Application of rules to class meetings (Article 42)...............................104
Issue of shares (Articles 43-44)...............................................................104
Interests in shares (Article 45)................................................................105
Share certificates (Articles 46-49)..........................................................105
Shares not held in certificated form (Articles 50-51)...........................106
Partly paid shares (Articles 52-62).........................................................106
Transfer and transmission of shares (Articles 63-68)..........................107
Consolidation of shares (Article 69)......................................................108
Distributions (Articles 70-77)..................................................................108
Capitalisation of profits (Article 78).......................................................109
Communications (Articles 79-80)...........................................................110
Administrative arrangements (Articles 81-84).....................................110
Directors’ indemnity and insurance (Articles 85-86)...........................111
APPENDICES 113
APPENDIX A
Cross-referencing of model articles for private companies
limited by shares with the 1985 table A................................................114
APPENDIX B
Cross-referencing of 1985 table A with model articles for private
companies limited by shares..................................................................116
APPENDIX C
Table A to the Companies Act 1985 as amended by SI 2007/2541
and SI 2007/2826......................................................................................119
A THOROGOOD SPECIAL BRIEFING ix