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29 Dec

COMPANY LAW 1.9 ALTERATION OF ARTICLES OF ASSOCIATION

ALTERATION OF THE ARTICLES.

:: Subject to the provisions of the CAMA and MEMART, it can be amended by a special resolution-Section 48.

:: A co cannot be restrained from altering its articles but it may pay damages[1] to a third party (it has contracted with) that is injured by the alteration-Punt V Symons Ltd[2]. Southern Foundries Ltd V Shirlaw[3]..

:: The alteration must follow due process and must be exercised bona-fide and for the benefit of the company. In Shuttleworth V Cox Brothers and Co (Maidenhead) Ltd, the Articles provided that the plaintiff and 4 others should be the company’s directors for life unless disqualified on one of the specified 6 grounds. The article was altered to include a 7th ground (which provided that all the co-directors can request that one director should resign. All the co-directors then requested for the plaintiff to resign. The plaintiff sued for breach of contract. The court Per Scrutton LJ held that since there was no evidence of bad faith and the alteration was for the company’s benefit, they were allowed.

 

[1] Allen v Gold Rees of West Africa, Brown v British Abrasive Wheel Co Ltd. Sidebttom v Kershaw, Leese and Co Ltd.

[2] 1903 2 Ch 506.

[3] 1940 2 All er 445.

Isochukwu

Quite eccentric really

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