Part D The formation and constitution of business organisations 14: Constitution of a company 2112.1 Resolutions and agreements
In addition to the main constitutional document (the Articles of Association), resolutions and agreements
also form part of a company's constitution.
Resolutions are decisions passed by members which directly affect the company's constitution as they
are used to introduce, amend or remove provisions in the articles. Agreements made, for example
between the company and members, are also deemed as amending the constitution.
Copies of resolutions or agreements that amend the constitution must be sent to the Registrar within 15
days of being passed or agreed. If a company fails to do this then every officer who is in default commits
an offence punishable by fine. Where a resolution or agreement which affects a company's constitution is
not in writing, the company is required to send the registrar a written memorandum that sets out the
terms of the resolution or agreement in question.2.2 Articles of association
The articles of association consist of the internal rules that relate to the management and administration
of the company.The articles contain detailed rules and regulations setting out how the company is to be managed and
administered. The Act states that the registered articles should be contained in a single document which
is divided into consecutively numbered paragraphs. Articles should contain rules on a number of areas,
the most important being summarised in the table below.CONTENTS OF ARTICLES
Appointment and dismissal of directors Communication with members
Powers, responsibilities and liabilities of directors Class meetings
Directors' meetings Issue of shares
General meetings; calling, conduct and voting Transfer of shares
Members' rights Documents and records
Dividends Company secretary2.2.1 Model articles
Rather than each company having to draft their own articles, and to allow companies to be set up quickly
and easily, the Act allows the Secretary of State to provide model (or standard) articles that companies
can adopt. Different models are available for different types of company; most companies would adopt
model private or public company articles.
Companies are free to use any of the model articles that they wish to by registering them on incorporation.
If no articles are registered then the company will be automatically incorporated with the default model
articles which are relevant to the type of company being formed. Model articles can be amended by the
members and therefore tailored to the specific needs of the company.
Model articles are effectively a 'safety net' which allow directors and members to take decisions if the
company has failed to include suitable provisions in its registered articles or registered no articles at all.
The following summarises the model articles for a private limited company. Do not try to learn the
contents but use it to understand the type of information contained in them. Model articles are also
available for public limited companies. These articles are different to those of a private limited company
as they are more appropriate to the needs of a plc.
We shall cover a number of the model articles later in this Study Text.Key term