The Articles of Association govern the running of a company and set out the rights and obligations of members and directors. Below are the main sections of the Articles of Association. The details below describe the terms and conditions in each section. Match each section to its description.
Transmission of Shares
Notice of Meetings
Proceedings at General Meetings
This allows the directors of the company to sell a shareholder's shares in the company to repay any debt owed by the shareholder to the company.
This provides that any shareholder who wishes to sell his shares has to first offer them to the other shareholders at the same price as he wishes to sell to a third party.
This provides that the directors of the company shall not be personally liable in any civil or criminal proceedings as long as they have carried out their duties lawfully.
This deals with advance information that is to be given to each member about meetings and provides that each member is allowed to appoint a proxy to attend in his place at meetings.
This requires all directors to be informed about meetings, whether they are in the country or abroad.
This allows the company to recover its costs of recovery from a late paying shareholder.
This sets out the share capital of the company
This allows the assets of the company to be distributed if the company goes into liquidation.
This states the number of members who must be present.
This provides that when a shareholder dies he is deemed to give notice to sell his shares (which allows the other shareholders to buy them for a fair price).
This regulates the maximum number and their conduct.
The duties of the directors
The directors of a company are responsible for its governance. Their duties are clearly set out and, if they do not carry them out, not only may they be held liable under the law, but they may also be banned from acting as director of any company for a certain period of time.
Read through the duties and then answer the questions.
Except with the prior sanction of the holders of more than 50 per cent of the issued share capital of the Company from time to time the Directors shall procure that the Company shall not:
1. sell, transfer or otherwise dispose of the whole of its undertaking, property or (save in the ordinary course of trading) assets or a part thereof being substantial in relation to its total undertaking, property and assets;
2. issue shares, loan stock, debentures or any other form of security of the Company including for this purpose any issue of redeemable shares;
3. purchase any of its own shares;
4. incur or agree to incur any capital commitments in excess of £100,000;
5. engage or dismiss any person as a Director;
6. increase by more than 20 per cent the remuneration payable to any of its Directors, officers, employees, consultants or agents;
7. dismiss any employee;
8. purchase or sell, take or let on lease or tenancy or otherwise acquire or dispose of any real or leasehold property for any estate or interest;
9. institute any litigation save in respect of the debts owing to it in the ordinary course of business;
10. acquire or dispose or any shares, debentures, debenture stock or other securities in any other company.
Which clause states that the director shall, unless agreed by others, ensure that the company does not:
buy its own shares?
appoint or fire another director?
bring a case to court except to collect money owed?
increase the pay to staff above a certain percentage?