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Articles of

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ARTICLES OF enactments under which the system of limited liability companies was inaugurated, now consolidated and amended by the Companies (Consolidation) Act, 1908, were provisions not merely for the benefit of the shareholders for the time belug in the company, they were also intended to provide for the interests of those who might become shareholders in succession to the shareholders for the time being; and for the benefit of the outside public, and more particularly those who might be creditors of companies of this kind. The title-deeds of such companies are the Memorandum of Association and the Articles of Associalzon. The former will be dealt with in the article under that heading. With regard to the Articles, it may be laid down that they play a part subsidiary to the Memorandum of Association. They accept the latter as the charter of incorporation of the company ; and so accepting it, the Articles proceed to define the duties, rights, and powers of the governing body of the company as between such governing body themselves and the company at large. They further set out the mode and form in hich the business of the com pany is to be carried on, and the mode and form in which changes in the internal regulations of the company may from time to time be made. The Companies Act provides that in the case of companies limited by guarantee or unlimited, the Memorandum of Association must be accompanied by Articles of Association. But in the case of companies limited by shares, which is the usual form of a limited company, it is optional whether there shall be Articles or not. In the absence of Articles of Association, their place is taken by a model form scheduled to the Act and known as Table A. When there are Articles of Association, they may exclude the opera tion of Table A altogether and themselves set out in detail all the rules and regulations of the company ; or they may adopt 'Fable A in part as may be specified and modified. The subsci ibers to the Memorandum of Associa tion are masters of the regulations which, m ithin the limit of the law, they wish to be comprised in the Articles ; and the latter must also be duly signed by each of them in the presence of and attested by a witness. The Articles must be expressed in separate paragraphs, printed, and numbered arith metically. Upon registration of the company, the Articles of Association must be filed and stamped (10s.) as a deed.

Where the company has a share capital, the Articles must, if the company is unlimited, or limited by guarantee, state the amount of share capital proposed to be registered ; if it has no share capital then the number of members proposed to be registered must be stated.

It is also provided that, subject to the provisions of the Act, and to the conditions contained in its Memorandum, a company may, by special resolu tion, alter all or add to its Articles. In the same way may be made new regulations to the exclusion of, or in addition to, all or any of the regula tions of the company, even to the extent of altering its capital or its distribu tion into shares. Of the internal regulations of the company the members of

it are absolute masters, and provided they pursue the course marked out in the Companies Act, that is to say, by special resolution, they may alter those regulations from time to time. And a company cannot contract itself out of this right of alteration, though it must always conform to the limitations of the memorandum. The latter is, as it were, the area beyond which the action of the company cannot go ; inside that area the shareholders may make such regulation for their own government in the Articles as they may think fit. A company cannot claim and exercise a power under the guise of regulating its internalsaffairs, to go beyond the objects or purposes expressed or implied in the memorandum. If the company should enter into a contract beyond the powers contained in its memorandum, such a contract is void.

Articles of Association are a contract by the shareholders amongst themselves, and do not give a right of action to a person tot such a party thereto; and it makes no difference that the person claiming a contract in the Articles was himself one of the subscribers. Thus, where in the Articles it was provided that A. should be the solicitor to the company, it was held that A. had no right of action against the company for non employment. The nomination in the Articles was merely an authority to the directors by the shareholders to appoint such person if they thought fit. A clause in the Articles providing that the shares of any shareholder who brought an action against the company should be forfeited on payment to him of the full market value thereof would be invalid. Nor can the statutory right of a shareholder to present a winding-up petition be restricted by the Articles. A company cannot be prevented from altering its Articles of Association, an) binding its present members by such alteration, although its prospectus contains representations contrary to the Articles as altered ; but after signrture :Ind before registration the Articles cannot be altered without the consent of a subscriber thereto, so as to make such subscriber liable as a contributory. As we have seen above, the Articles are filed upon registration of the company. They may be inspected by any one at Somerset House upon payment of one shilling. A shareholder is entitled to a copy from the company on payment of a fee not exceeding one shilling. A com pany that refuses such a copy is liable to a penalty. This right of public inspection is a natural consequence of the rule that all persons dealing ith a company, whether shareholders or outside creditors, are presumed to know its external position as distinguished from the details of its indoor manage ment. See further hereon : TABLE A ; and COMPANIES : THEIR FORMATION AND CONSTITUTION.