Mr. John Miriti recently attended a court session during which he heard a cousel asking a key witness about articles of association of a company. Mr. John Miriti does not understand the meaning of articles of association.
Explain to him:
(i) The meaning and characteristics of the articles of association.
(ii) The legal significance of the articles of association.
(i) Section 2 (1) of the Companies Act provides that article means articles of association of a company as originally framed or as altered special resolution including so far as they apply to the company, the regulation of Table A.
– Articles are one of the constitutive documents in company formation.
– All companies must have a set of regulations as their articles.
– It is the internal Constitution of the Company.
– It contains the rules of internal management.
– It regulates the relations between the company and its members.
– A company limited shares may adopt Table A as its articles of association.
– It is alterable a special resolution of members in general meeting.
– Must be signed every subscriber to the memorandum.
The articles are a contract between each member and the company. It was so held in Welton V. Saffery.
It binds both the company and its members. Each party must observe its provisions. Hickman V. Kent.
It is a contract between the company and members only.
It confers rights and imposes duties on the parties.
The rights it confers can only be enjoyed members in their capacity as members
Beattie V. Beattie.
The articles cannot bind a third party.