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Company Constitution Notes

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This is an extract of our Company Constitution document, which we sell as part of our Business Law and Practice Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Core Module: BLP Paper A

Company Law - Private Limited Companies Company Constitution Definition: 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

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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.

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

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

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

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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?

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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 1

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