Company law revision question and answer

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.

answer
(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.

(ii)
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.

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