No time like the present to review your company’s constitution! The Companies Act 2006 was finally implemented on 1 October 2009 and represents a dramatic shake-up of company law, for further details click here.
Existing companies will be familiar with having two constitutional documents:
·Memorandum of Association which includes the company’s objects in essence what the company can do; and ·Articles of Association, the internal rule book for the company.
As from 1 October the provisions contained in the Memorandum of existing companies will be deemed to form part of its Articles.Under the 2006 Act companies have unrestricted objects but this is subject to what is contained in their Articles. For most trading companies it will advisable to remove the objects which now form part of their Articles as these may actually restrict what the company can do.
The 2006 Act has also introduced a new set of default Articles called the Model Articles and these replace the old Table A which most existing companies incorporate into their Articles by reference.Existing companies should therefore review their Articles to consider:
Adopting the new Model Articles
Taking advantage of the new provisions of the 2006 Act e.g. enabling directors to authorise conflicts of interest
Ensure there is no conflict between existing Articles and the provisions of the 2006 Act
Remove redundant and out of date references e.g. many procedures are now contained in the 2006 Act
If you would like to know more about how these changes affect your company please contact Craig Hardman at Steele Raymond LLP.
