The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter discusses the company’s constitution, which can be a popular area for examination questions. The chapter focuses on the company’s articles of association, considering in particular alteration of the articles and the legal effect of the articles (the ‘statutory contract’). The chapter also considers shareholder agreements, which are often used as a supplement to the company’s constitution.
Chapter
3. The Corporate Constitution
Chapter
8. The constitution of the company: dealing with insiders
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter discusses the constitution of the company, with emphasis on the articles of association. It first outlines the operation of the memorandum and the articles before turning to the law surrounding the contract of membership under s 33 of the Companies Act 2006. It then considers some elements of corporate theory in relation to the articles of association, contract between the company and the members, contract between the members, the question of who is entitled to sue to enforce the s 33 contract, and the issue of outsider rights with respect to the s 33 contract. The chapter also looks at the historical reforms proposed by the Company Law Review Steering Group for the Companies Act 2006 and concludes by analysing the effects of shareholder agreements on the statutory obligation of the company.
Chapter
5. Majority and Minority Shareholders
Where a company has a controlling or a small group of controlling shareholders, the non-controlling shareholders are at risk that the controllers will extract private benefits of control at the expense of the non-controllers. UK company law contains a wide range of techniques for addressing this issue, some more effective than others. This chapter begins by examining the various ways in which well-advised investors can contract for protection before they enter the company and how the law protects the agreements reached. The second part discusses rights to exit the company upon the occurrence of certain events. The third part discusses disclosure rights, designed to bring self-dealing transactions into the open. The fourth focuses on ways of structuring the board or shareholder body when the decision before it carries a high risk of self-dealing. The final part considers cases where the courts review the substantive fairness of the controllers’ conduct, notably, but not only, the provisions on ‘unfair prejudice.
