April Corporate Additions and Updates
The following new documents are included in the “Memorandum & Articles of Association” Corporate sub-folder:
- Modified Model Articles (Private Company)
- Guidance Notes for Modified Model Articles
The following Corporate sub-folders have been updated:
- Liquidation and Winding Up
- Electronic Communication
Modified Model Articles (Private Company)
Since 1st October 2009, companies have been able to adopt the Model Articles and new companies can choose to adopt the Model Articles or adapt them to suit their own purposes. The intention of the Model Articles is to provide a simplified way for a company to run itself internally. Many of the provisions of Table A have been included but simplified and/or changed in order to be compliant with the Companies Act 2006. However, these Modified Model Articles of Association for a Private Company clarify the provisions and add some that were in Table A but are missing from the Model Articles.
A brief summary of the principal modifications is as follows:
- Clarification of which rules on decision-making apply to sole directors.
- Directors can count as part of the quorum and vote at a board meeting on any resolutions concerning a proposed or existing transaction or arrangement in which that director has a direct or indirect interest provided that the director discloses that interest.
- Alternate directors can now be appointed.
- There is now certainty as to how distribution payments are made.
- The persons eligible to demand a poll at a general meeting have been restricted.
- Decisions made by a show of hands can less easily be overturned by demands for a poll.
- The company has an obligation to indemnify and insure all current and former officers of the company (but not auditors).
Detailed Guidance Notes for the Modified Model Articles have been created. These Guidance Notes should be read in conjunction with the Modified Model Articles as they set out all the changes made.
Liquidation and Winding Up
The documents have been substantially amended following the abolition of extraordinary resolutions. Under the old company law, an extraordinary resolution had to be passed by the shareholders before a company could be placed into either Members’ Voluntary Liquidation or Creditors’ Voluntary Liquidation. Under the Companies Act 2006, a special resolution is required to place a company into either Members’ Voluntary Liquidation or Creditors’ Voluntary Liquidation and a consequential amendment has been made to the Insolvency Act 1986.
Some minor changes have been made to the documents in order to create a clear distinction between electronic communication by means of a website and all other forms of electronic communication. Both methods require shareholders to agree to the electronic communication specifically or generally. Furthermore, if companies follow certain steps, the shareholders will be deemed to have consented to electronic communication by means of a website even if some or all of them fail to respond to the request for consent. The “Request for Consent to Electronic Communication” (CO.EC.01) has been amended so that it has a dual function of obtaining the consent of a company’s shareholders and debenture holders to send or supply documents and information by electronic means and also to communicate with them by means of a website.
The document guidance notes have been fully and comprehensively rewritten.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.