Formation of a Company [2]

1. Formation of a Company [2] Unit 5

2. Articles of Association Internal rules of the company The ‘constitution’ Binding on any shareholders as if a contract ‘Model’ articles are available

3. Articles The number of directors Method of appointment Powers of directors Procedure for calling meetings Voting rights Keeping of accounts Declaration of dividends [share of profits]

4. Changing the Articles Under s21 CA 2006 By ‘special resolution’ [75% of those voting] Bushell v Faith 1970 However – changes must ONLY be made for the benefit of the company NOT used to remove a director or ‘oppress’ the minority shareholders Shuttleworth v Cox 1927

5. Entrenchment Articles can be ‘entrenched’ – ie provisions of the articles can only be repealed or amended IF conditions are met or procedures are complied with – more restrictive than a special resolution s22(1)

6. Company Objects There can be an ‘objects clause’ This sets out the companies aims and objectives If it goes beyond – it is acting ultra vires Ashbury v Riche 1875

7. Objects However – under s31 (1) CA 2006 – the objects of a company are completely unrestricted – other than being lawful The company may CHOOSE to restrict however s31 The company will always be said to have capacity to carry out anything in its constitution s39 The directors can bind the company without limitation if the dealings fall within the constitution s40

8. Tort of Passing Off No company can use a name which is The same as another name registered A criminal offence; offensive; or sensitive Suggest connection with central or local government

9. Passing off Under s69 (1) An ‘applicant’ can object to the registrar if they argue that the name is ; (a) the same as a name associated with the applicant in which he has goodwill; or (b) that it is sufficiently similar to such a name that its use in the UK would be likely to mislead by suggesting a connection between the company and the applicant

10. Passing Off - same name Pfizer v Eurofood 2001 [Viagrene] Phones 4u Ltd v Phone4u.co.uk Internet Ltd 2005

11. Passing off – criminal/offensive R v Registrar of Companies ex-parte A-G 1980 The registrar incorporated Lindi St Clair (Personal Services) Ltd in Dec 1979 The Attorney-General asked for judicial review to order the Registrar to quash the incorporation on the grounds of illegality/public policy The company was formed for the purposes of prostitution

12. Criminal! The Registrar was asked first to register the following: ‘Prostitute Ltd’ ‘Hookers Ltd’ ‘Lindi St Claire (French Lessons) Ltd’…. He refused!

13. Criminal! He accepted and registered ‘Lindi St Claire (Personal Services) Ltd’ The memorandum stated the object as ‘to carry on the business of prostitution’ The Director was listed as ‘Lindi St Claire – prostitute’ The only other member was ‘Miss Duggan – cashier’

14. Judicial Review The Attorney General asked for the Company to be struck off the register Lindi argued ‘it is most unfair of the government to go ahead with my company one moment then quash it the next…’ THE REGISTRATION WAS QUASHED!!