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Company Articles and Company Constitution

Understand your Company articles and Company constitution. This Report is written in an easy-to-understand style and provides an in-depth appreciation of such things as all the model articles, the default provision, the resolutions that may be part of the constitution…

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Overview

All companies have articles and all companies have a constitution.

It’s crucial that both elements are understood by directors, company secretaries, shareholders, legal staff and others. An investor looking to sell shares, for example, may not be aware that directors (with the authority of the articles) can refuse to register the transfer because they don’t approve of the proposed transferee. Such are the hazards involved.

Company Articles and Company Constitution provides a full and essential understanding of the subject matter, charting its evolution from the 19th century through to the implementation of the important but little understood Companies Act of 2006.

Written in plain English, the comprehensive report guides the reader through the resolutions and agreements that make up a company constitution. The changing relationship between the memorandum and the articles is explained, whilst a step-by-step guide systematically explores the articles and what to consider when changing them.

Who should read this Report?

  • Company secretaries
  • Company directors
  • Anyone working directly for company secretaries and company directors
  • Accountants, lawyers and consultants

Content

1. The evolution of company articles and the company constitution
  • Introduction
  • Companies prior to 1844
  • Company registration and the Joint Stock Companies Acts of 1844 and 1856
  • Limited liability
  • Evolution from 1856 to 1985
  • The Companies Act 2006
  • The number and types of companies
  • Development of the constitution and articles
  • The 1856 and 2006 model articles compared
2. The constitution
  • Introduction
  • Definition of a company’s constitution
  • Resolutions and agreements that are part of the constitution
  • Registration of resolutions and agreements
  • Resolutions and agreements to accompany all copies of the articles
3. The new-style memorandum and the old-style memorandum Introduction
  • The new-style memorandum
  • The old-style memorandum
  • Companies registered before 1st October 2009
  • Changes to the memorandum
  • Company name
  • Domicile
  • Objects clause
  • Authorised share capital
  • Limited liability
  • Public company clause
  • Entrenched provisions
4. Articles
  • Introduction
  • The compulsion to have articles
  • The required form of the articles
  • The articles as a contract
  • The purpose of articles
  • The three options concerning articles
  • Model articles
  • Model articles as the default provision
  • The relationship between articles and statutory law
  • The relationship between articles and shareholder agreements
  • Authorised share capital
  • Objects
  • The requirement to provide copies of the articles
  • Articles and the Interpretation Act
  • The latest model articles in context
  • Changing the articles and entrenchment of articles
5 Considerations when changing the articles
  • Introduction
  • Dangers to be avoided
    Members’ meetings and written resolutions
  • Annual general meetings
  • Notice period for general meetings
  • Short notice of meetings
  • Notice period for a special resolution
  • Proxies
  • Quorum at a members’ meeting
  • Voting on a show of hands and polls
  • Chairman of a general meeting and the chairman’s casting vote
  • Written resolutions of the members
    Directors
  • Directors’ meetings
  • Alternate directors
  • Minimum and maximum number of directors
  • Removal and termination of directors
  • Retirement of directors by rotation
  • Chairman of directors’ meetings and the chairman’s casting vote
  • Directors’ duty to avoid conflicts of interest (CA2006 section 175)
  • Directors’ duty to declare interest in proposed transaction or arrangement * (CA2006 section 177)
  • Directors’ indemnity
    Share capital and shares
  • Authorised share capital
  • Partly paid shares
  • Allotment of shares
  • Purchase of own shares
  • Redeemable shares
  • Transfer of shares
    Other matters
  • Provision for the death of all the directors and members
  • Age and other discrimination
  • Objects
  • Electronic and website communication with members
  • Failure to notify contact details

6. How articles and the company name are changed
  • Introduction
  • A piece of advice
  • Another piece of advice
  • The way that articles are changed
  • Considerations for listed companies
  • Variation in class rights
  • Change of company name
  • Example of special resolution to alter articles
  • Example of special resolution to adopt new articles
  • Example of special resolution for change of name of company
  • Example of written special resolution to alter articles
  • Example of certified copy of written special resolution for Companies House
7. Review of model articles for private companies
  • Introduction
  • Liability of members (Article 2)
  • Directors’ powers and responsibilities (Articles 3-6)
  • Decision making by directors (Articles 7-16)
  • Appointment of directors (Articles 17-20)
  • Shares (Articles 21-29)
  • Dividends and other distributions (Articles 30-35)
  • Capitalisation of profits (Article 36)
  • Organisation of general meetings (Articles 37-41)
  • Voting at general meetings (Articles 42-47)
  • Administrative arrangements (Articles 48-51)
  • Directors’ indemnity and insurance (Articles 52-53)
  • Model articles for private companies limited by guarantee
8. Review of model articles for public companies
  • Introduction
  • Liability of members (Article 2)
  • Directors’ powers and responsibilities (Articles 3-6)
  • Decision-making by directors (Articles 7-19)
  • Appointment of directors (Articles 20-24)
  • Alternate directors (Articles 25-27)
  • Organisation of general meetings (Articles 28-33)
  • Voting at general meetings (Articles 34-40)
  • Restrictions on members’ rights (Article 41)
  • Application of rules to class meetings (Article 42)
  • Issue of shares (Articles 43-44)
  • Interests in shares (Article 45)
  • Share certificates (Articles 46-49)
  • Shares not held in certificated form (Articles 50-51)
  • Partly paid shares (Articles 52-62)
  • Transfer and transmission of shares (Articles 63-68)
  • Consolidation of shares (Article 69)
  • Distributions (Articles 70-77)
  • Capitalisation of profits (Article 78)
  • Communications (Articles 79-80)
  • Administrative arrangements (Articles 81-84)
  • Directors’ indemnity and insurance (Articles 85-86)

Appendices

Appendix A
  • Cross-referencing of model articles for private companies limited by shares with the 1985 table A
    Appendix B
  • Cross-referencing of 1985 table A with model articles for private companies limited by shares
    Appendix C
  • Table A to the Companies Act 1985 as amended by SI 2007/2541 and SI 2007/2826
    Appendix D
  • Table C to the Companies Act 1985 as amended by SI 2007/2541 and SI 2007/2826
    Appendix E
  • Model articles for private companies limited by shares
    Appendix F
  • Model articles for private companies limited by guarantee
    Appendix G
  • Model articles for public companies

The author

Roger Mason is a Chartered Secretary and a Chartered Certified Accountant, and a very experienced finance 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. His books for Thorogood include The Company Secretary’s Desktop Guide
(now in its fifth edition), 501 Questions and Answers for Company Directors and Company Secretaries (now in its second edition) and The Complete Guide to Debt Recovery.

Continuing professional development

This course qualifies for the following CPD programmes:

  • CPD certificate of attendance: 4.00 hours

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