Articles of Association CASES
In English company law, Articles of Association are a formal document defining a company’s internal governance, rules, procedures, and responsibilities of directors and shareholders.
Definition and Principles
The Articles form part of a company’s constitution and bind the company and its members. They regulate decision-making, management authority, share rights, meetings, and administrative procedures.
Common Examples
- Rules for appointing directors and conducting board meetings.
- Provisions governing share transfers and shareholder rights.
- Procedures for declaring dividends and managing financial affairs.
Legal Implications
- Legally binding on members and enforceable by courts.
- Must comply with the Companies Act 2006.
- Amendments typically require shareholder approval.
Practical Importance
Understanding the Articles of Association is vital for directors and shareholders to ensure proper governance, legal compliance, and effective management of a company’s affairs.
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A company appointed a managing director for a ten-year term. After a takeover, the company's articles were changed, enabling his removal. The court held this was a wrongful dismissal, implying a term that the company would not prevent his service. Facts In December 1933, the plaintiff, Mr Arthur Shirlaw, was appointed as the managing director of Southern Foundries (1926) Ltd (‘Southern’) for a fixed term of ten years. The appointment was made under an agreement. In April 1936, another company, Federated Foundries Ltd (‘Federated’), acquired the shares of Southern. Federated then altered Southern’s articles of association, adopting a new set
