Companies’ Act, as well as their effects and procedure for amendment. It also considers the contractual capacity of companies, the authority of directors to bind companies, and the legal effect of any limitations on these in the companies’ constitution. 21.2 LEARNING OBJECTIVESAt the end of this chapter, the reader should fully understand:• The meaning and constituents of a company’s constitution• The sources of a companies’ constitution• The importance and effects of a company’s constitution• The enforceability of a company’s constitution• How a company’s constitution may be altered• The meaning of companies’ contractual capacity• The extent of a company’s contractual capacity and the implications of any limitations on it21.3 THE COMPANY CONSTITUTIONUnder s. 17 ands. 29 CA 2006, the Articles of Association of a company, along with any special resolution, or unanimous resolution or agreement constitute the constitution of the company. The memorandum of association, which used to be part of the constitution, is no more so. The things previously required to be included in the memorandum, such as the name, registered address, type of company, and the objects of a company are no longer required to be included under the CA 2006. The articles of association is the most important internal document of a company and contains rules for the regulation and management of the company. It will normally contain provisions for the appointment, removal, conduct and remuneration of directors, secretaries, solicitors, auditors etc.; the regulation of the conduct of different meetings; voting rights and procedure; the rights attached to various classes of shares; rules on dividends; the preparation of company accounts; membership of the company, etc.Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCYCOMPANY CONSTITUTION AND CONTRACTUAL CAPACITY385A company must submit a copy of its articles of association before it could be registered, but may adopt the model articles in the Companies Act (s. 18 (1) & (2) CA 2006). If a company does not submit or adopt any articles, the relevant model articles in the Companies Act would automatically apply to it (s. 20). Articles must be contained in one document and must be divided into paragraphs numbered consecutively –s. 18(3).Where the provisions of the Articles contravene a provision of the Companies Act, the contravening provisions of the Articles shall be null and void. For companies existing before the coming into force of the CA 2006, any provisions in the memorandum that would be in the articles under the 2006 Act would now be deemed to be in the articles.21.3.1 THE EFFECTS OF THE ARTICLES OF ASSOCIATIONS. 33 of the Companies Act 2006 provides that:a) The provisions of a company’s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.” And,b) “Money payable by a member to the company under its constitution is a debt due from him to the company.
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