Workshop 3 Directors' Powers and Authority The Company's Constitution Definition The company's constitution is defined in ss.17, 29 and 32 of the Companies Act 2006. It includes: (a) The company's articles of association; (b) Its certificate of incorporation; (c) Its current statement of capital; (d) Copies of any court orders and enactments altering the company's constitution; (e) Resolutions affecting the constitution; (f) Agreements involving shareholders which affect the constitution. The Articles of Association . The articles of association are the most important part of the company's constitution. . Every company must have a set of articles of association which lays out the rules on how the company is to be run (s.18(1) CA 2006). The articles form the company's internal rulebook. . The company's articles will always be available for inspection by the public. . There are three options for a company's articles: (a) Unamended model articles of association; or (b) Model articles of association with amendments; or (c) Bespoke articles of association. Unamended model articles . A company registered with no other articles will by default have unamended model articles as its articles (s.20(1) CA 2006). . When a company adopts unamended model articles it must abide by all 53 of the articles. Content of the unamended model articles Article numbers 1-2 3-6 7-16 21-29 30-35 36 Defined terms and liability of members Subject Directors' powers and responsibilities Decision-making by directors Shares Dividends and other distributions Capitalisation of profits
37-41 42-47 48-51 52-53 Organisation of general meetings Voting at general meetings Administrative arrangements Directors' indemnity and insurance Amended Model Articles . As the model articles represent the bare minimum set of rules, some entrepreneurs will want to set up their companies with additional articles to provide greater clarity on how the company should be run. . When setting up a new company with amended model articles, only a copy of the changes to the model articles need to be submitted with the application for registration. . The amendments or any new articles included are known as 'special articles'. . Only the amendments to the model articles and entirely new articles need to be written down. Bespoke Articles . A company may be set up with its own tailor-made set of articles without reference to the model articles. . The advantage of bespoke articles is that they can be drafted to the exact requirements of the private company's owners. Amending the Constitution . The shareholders must usually pass a special resolution to change the articles of a company (s.21(1) CA 2006). · A special resolution means it must have at least 75% of shareholder votes (s.283(1) CA 2006). . The decision is made by the shareholders as owners of the company rather than by the directors managing the company, in recognition of the importance of the articles to the company's existence. . The Registrar of Companies must be sent a copy of the articles as amended not later than 15 days after the amendment takes effect (s.26(1) CA 2006). .