This website uses cookies to ensure you get the best experience on our website. Learn more

LPC Law Notes Business Law and Practice Notes

Company Constitution Notes

Updated Company Constitution Notes

Business Law and Practice Notes

Business Law and Practice

Approximately 649 pages

A collection of the best LPC BLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of Business Law and Practice notes available in the UK this year. This collection of notes is fully updat...

The following is a more accessible plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Company Law – Private Limited Companies

Company Constitution


S.17 Part 3 CA 2006:Unless the context otherwise requires, references in the Companies Act to a company’s constitution include –

(a) Company’s articles, AND

(b) Any resolutions and agreements to which chapter 3 applies

(See S.29 - Resolutions and agreements affecting the company’s constitution - i.e. special resolutions, shareholders agreements).

What is the company empowered to do - Objects clause

  • Under Old style memorandum (prior to CA 2006) – companies had objects clauses’ that would restrict the company’s contractual capacity. Any transaction beyond objects clause would be UV.

  • S.31(1) CA 2006:Unless a company’s Articles specifically restricts the objects of the company, its objects are unrestricted”

  • S.28(1): if the old-style memorandum had an objects clause – it becomes part of the company’s constitution.

  • S.8 New style memorandum is not part of company’s constitution – it only shows initial subscribers for shares.

  • Therefore company that was incorporated PRIOR to the CA 2006 should amend its articles or be restricted by its objects.

THIRD Parties – protection:

S.39(1):The validity of an ACT DONE BY A COMPANY shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution’.

Therefore a contract can STILL BE ENFORCED even if the company is acting beyond its capacity. This gives protection to third party contractors.

How can a third party get this protection?

a) It must be an act done by the company (i.e. agent’s authority issue? Does the agent have authority?)

b) The act done cannot be illegal (S.39)

c) The third party must be acting in good faith

Do the company’s agents have sufficient authority to bind the company?

  • S.43 CA 2006: Contracts can be made on behalf of the company by any person acting under its authority [express or implied].

Actual - express

In writing, oral

S.161: Director still has authority even if he was not appointed correctly, disqualified from holding office, ceased to hold office.

Actual – Implied By conduct
Apparent / ostensible Authority as it appears to the outsider e.g. Director holds out to have express or implied authority.

Key question: Was the contract beyond the powers of the board? Consider the articles and whether a special resolution was needed and was it carried out or has director avoided a minority protection ?

Good Faith:

  • S.40(1) CA 2006: To get protection, the third party must be acting in good faith.

  • What is GOOD FAITH?

S.40(2)(B)(III) Mere knowledge about restriction in constitution is not bad faith
S.40(2)(b)(i) There is no duty to enquire as to...

Buy the full version of these notes or essay plans and more in our Business Law and Practice Notes.

More Business Law And Practice Samples