Constitution of a Company
A Company’s Constitution
• To form a company, the Registrar of Companies must be provided with the
constitution of a company
• The constitution of a company comprises two key documents –
1. The memorandum of association (CA 2006, S8)
2. The Articles of Association (CA 2006, SS17-20)
• Note – CA 2006 made several changes in relation to the constitution of a
company but many of these changes do not automatically affect companies
that are already registered under CA 1985
• CA 2006 S18(1) – a company must have articles of association prescribing
regulations for the company
• CA 2006 s33(1) – the provisions of a company’s constitution bind a 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
• Hickman v Kent or Romney Marsh Sheep Breeders Association (1915) – The
court was asked whether the articles of association created rights between
the shareholders and the company, or simply between the shareholders inter
se in respect of their rights as shareholders
Held – the constitution creates a statutory contract not only between members
themselves but also between the members and the company
• UK company constitutions work much like ordinary contracts (e.g. general
freedom, binding on members)
The Memorandum of Association
• The memorandum is often described as an external document as it is aimed
at third parties such as potential customers and creditors
• The contents of the memorandum of association under CA 1985 (s2)-
- Name of the company
- Registered office
- Objects clause
- Limitation of liability
- Share capital
- Association clause
• Contents under CA 2006 –
- Statement that the promotors wish to form a company
- Agreement to become members of the company and (in the case of a
company with share capital) to take at least one share each
The Articles of Association
• The articles of association are a set of rules governing the running of the
company
• A model set of articles (model articles – CA 2006 s19 and Companies (Model
Articles) Regulations 2008) has been provided by every Companies Act as a
default set of rules for those setting up a company
A Company’s Constitution
• To form a company, the Registrar of Companies must be provided with the
constitution of a company
• The constitution of a company comprises two key documents –
1. The memorandum of association (CA 2006, S8)
2. The Articles of Association (CA 2006, SS17-20)
• Note – CA 2006 made several changes in relation to the constitution of a
company but many of these changes do not automatically affect companies
that are already registered under CA 1985
• CA 2006 S18(1) – a company must have articles of association prescribing
regulations for the company
• CA 2006 s33(1) – the provisions of a company’s constitution bind a 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
• Hickman v Kent or Romney Marsh Sheep Breeders Association (1915) – The
court was asked whether the articles of association created rights between
the shareholders and the company, or simply between the shareholders inter
se in respect of their rights as shareholders
Held – the constitution creates a statutory contract not only between members
themselves but also between the members and the company
• UK company constitutions work much like ordinary contracts (e.g. general
freedom, binding on members)
The Memorandum of Association
• The memorandum is often described as an external document as it is aimed
at third parties such as potential customers and creditors
• The contents of the memorandum of association under CA 1985 (s2)-
- Name of the company
- Registered office
- Objects clause
- Limitation of liability
- Share capital
- Association clause
• Contents under CA 2006 –
- Statement that the promotors wish to form a company
- Agreement to become members of the company and (in the case of a
company with share capital) to take at least one share each
The Articles of Association
• The articles of association are a set of rules governing the running of the
company
• A model set of articles (model articles – CA 2006 s19 and Companies (Model
Articles) Regulations 2008) has been provided by every Companies Act as a
default set of rules for those setting up a company
