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Changing the Articles of Association

Changing the Articles of Association

Postby shootist » Mon Jun 29, 2015 7:57 am

...of a company limited by guarantee.

What would be required to do this? How difficult would it be to bind the company towards a particular policy and how binding can it get?
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Re: Changing the Articles of Association

Postby atticus » Mon Jun 29, 2015 9:17 am

Special resolution of the members (shareholders). 75% vote in favour required.
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Re: Changing the Articles of Association

Postby shootist » Mon Jun 29, 2015 9:20 am

Many thanks.
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Re: Changing the Articles of Association

Postby dls » Mon Jun 29, 2015 9:37 am

It used to be that such restrictions were effectively placed in the memorandum of association, and yes they could be changed by an appropriate resolution. A company could only undertake such activities as were allowed for in the memorandum.
The Companies Act 2006 has changed all that. Now, a company has power to do anything save where an express limitation applies. It has been turned on its head.

A charitable company may for example (must) have a clause restricting its activities to ones which count as charitable in law.

See Companies Act 2006 sections 29 and thereabouts
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Re: Changing the Articles of Association

Postby shootist » Mon Jun 29, 2015 9:49 am

I had, in my ignorance, thought that the Memorandum of Association could not be changed, but the Articles of Association could. Is that not correct? If not, is one likely to carry more weight than the other, and which might be the more binding?
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Re: Changing the Articles of Association

Postby Hairyloon » Mon Jun 29, 2015 10:01 am

dls wrote:It used to be that such restrictions were effectively placed in the memorandum of association, and yes they could be changed by an appropriate resolution. A company could only undertake such activities as were allowed for in the memorandum.
The Companies Act 2006 has changed all that. Now, a company has power to do anything save where an express limitation applies. It has been turned on its head.

A charitable company may for example (must) have a clause restricting its activities to ones which count as charitable in law.

Other than to meet the requirements to be a charity, for what purpose might a company want to so restrict itself?
And what happens if it breaches its restrictions?
I suppose another way to look at it is to ask what was the purpose of the restrictions in the previous legislation?
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Re: Changing the Articles of Association

Postby atticus » Mon Jun 29, 2015 12:01 pm

to add to what dls has said, an express limitation may be added by special resolution.

Examples might be not to trade in armaments or tobacco products (for "ethical" companies). Clearly such limitations must comply with the law: a prohibition on selling to same-sex married couples, for example, would not be tolerated by a Court.
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Re: Changing the Articles of Association

Postby Millbrook2 » Mon Jun 29, 2015 1:40 pm

Hairyloon wrote:
dls wrote:It used to be that such restrictions were effectively placed in the memorandum of association, and yes they could be changed by an appropriate resolution. A company could only undertake such activities as were allowed for in the memorandum.
The Companies Act 2006 has changed all that. Now, a company has power to do anything save where an express limitation applies. It has been turned on its head.

A charitable company may for example (must) have a clause restricting its activities to ones which count as charitable in law.

Other than to meet the requirements to be a charity, for what purpose might a company want to so restrict itself?
And what happens if it breaches its restrictions?
I suppose another way to look at it is to ask what was the purpose of the restrictions in the previous legislation?


I think we have tread this path before. I believe it comes from the time when a company would seek funding to carry out a specific activity such as trade in china. The restrictions were to safeguard the shareholders and prevent the company doing something completely different from the purpose it stated. The directors would be personally liable if they did something different and the company failed.
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Re: Changing the Articles of Association

Postby shootist » Mon Jun 29, 2015 1:47 pm

Thanks again to all. More daft questions to follow. :)
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Re: Changing the Articles of Association

Postby Hairyloon » Mon Jun 29, 2015 3:36 pm

Millbrook2 wrote:
Hairyloon wrote:
dls wrote:It used to be that... A company could only undertake such activities as were allowed for in the memorandum...

Other than to meet the requirements to be a charity, for what purpose might a company want to so restrict itself?
And what happens if it breaches its restrictions?
I suppose another way to look at it is to ask what was the purpose of the restrictions in the previous legislation?


I believe it comes from the time when a company would seek funding to carry out a specific activity such as trade in china. The restrictions were to safeguard the shareholders and prevent the company doing something completely different from the purpose it stated...

Ah yes, that makes sense, thank you... Why are such restrictions no longer deemed necessary?
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