Constitution of a Company

Requirement of a Constitution

• Section $31$ CA $2016$: Constitution optional for all companies except a company limited by guarantee (CLBG).

Company With / Without Constitution

• With constitution – Section $31(2)$: Members’ & directors’ rights, powers, duties, obligations follow the Act as modified by the constitution.
• Without constitution – Section $31(3)$: Rights etc. governed solely by the Act.

Adoption

• Section $32(2)$: Constitution must not contravene CA $2016$.
• Lodgement: Section $32(4)$ – file with Registrar.
• Forms allowed: Sections $34$ & $38$.

Content

• Section $35$: Applies to all companies except CLBG.
• Section $38$: Applies to CLBG.

Alteration

• Section $36$: Special resolution required.
• Section $37$: Court may order alteration/amendment.

Restrictions on Alteration

• Must be in good faith & in the company’s best interest (cases: Greenhalgh v Ardene Cinema; Brown v Abrasive Wheel; Sidebottom; Kershaw Leese).
• Section $36$: Follow CA $2016$ & the constitution.
• Section $42(4)$: Extra limits for private companies.
• Section $194$: No liability for members who did not give written consent.
• Section $91$: Variation of class rights rules.

Legal Effect (Contract)

• Section $33$: Upon adoption, constitution binds like a contract between:
a) Company & members.
b) Members inter se.

Contract – Company & Member

• Binding provisions: those relating to a member as member.
• Breach ► contractual remedies.
• Cases: Hickman v Kent or Romney; Pender v Lushington.
• Non-binding if relating to another capacity (Eley v Positive Life Assurance).

Contract – Member & Member

• Members bound to each other; breaches actionable.
• Case: Rayfield v Hands.

Outsiders

• Constitution not a contract with outsiders.
• Case: Raffles Hotel v Malayan Banking.

Keeping & Inspection

• Section $47(1)(a)$: Keep constitution at registered office.
• Section $48$: Members’ right to inspect.
• Section $39$: Doctrine of constructive notice does not apply.