The Court of Appeal gave judgment yesterday in Cherry Tree Investments Ltd v Landmain Ltd [2012] EWCA Civ 736. Whilst not a company law case, the judgment contains some discussion of the distinctive contractual nature of the articles of association, in the context of debate about the interpretation of a registered charge. Arden LJ observed (at paras. [44] and [45]):Articles of association have special characteristics that justify the conclusion that they are to be regarded as addressed to third parties as well as to the shareholders at the time of their adoption. There is often a substantial number of other persons who have to rely on them and they may be in force for many years. Registration gives constructive notice of their contents to the entire world: Ernest v Nicholls (1857) 6 HL Cas 401. Third parties frequently have to rely on a company's articles of association to determine the powers of its directors. In addition, it is well established that articles of association cannot be rectified by the court (see the Bratton Seymour case). ... In the case of articles of association, therefore, the balance to be struck between the shareholders at the date of their adoption and third parties comes down in favour of protecting the third parties. Protection is achieved by the total exclusion of extrinsic evidence".
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