UK: England and Wales: a new liability on forfeiture of shares?

Judgment was given yesterday by Chief Master Marsh in Zavarco Plc v Yusof [2019] EWHC 1837 (Ch). It is noteworthy because of the analysis provided in respect of the effect of a provision in the Articles of Association on the consequences of the forfeiture of shares.

The company's Articles contained a provision stating that forfeiture extinguished all interests in the shares and all other rights relating to them; it also provided that where a person's shares had been forfeited, that person remained liable to the company for all sums payable by that person under the Articles (whether accrued before or after the date of forfeiture). The question for Master Marsh was the effect of this provision: did it - as the editors of Palmer's Company Law had stated - create a new obligation as debtor? The answer is of wide interest given the prevalence of such provisions (see, for example, the model articles for public companies: here, .doc).

Master Marsh disagreed with the position adopted in Palmer's Company Law and explained that in his view the position was as follows. Forfeiture changed the nature of the relationship but the sum owed remained the same. This sum remained, and was always, a contractual debt by virtue of section 33(2) of the Companies Act 2006. It was wrong to see the liability as a contributory transformed into a different liability. The preservation of the liability, arising from the articles of association, did not create a new liability or a new cause of action.

UK: company directors, mental health and the model articles

The Mental Health (Discrimination) Act 2013 received Royal Assent last month: see here. A copy of the Act is available here or here (pdf). Section 3 of the Act amends the Companies (Model Articles) Regulations 2008, the RTM Companies (Model Articles) (England) Regulations 2009 and the RTM Companies (Model Articles) (Wales) Regulations 2011, by removing the provision in the articles providing for termination of the director's appointment on grounds of mental health.

Update (5 May 2013) - a short overview of the change has been published by Companies House: see here.

UK: Companies House - issue 71 of Register published

Issue 71 (October 2009) of Register, the Companies House magazine, has been published: see here (pdf). It includes a short article titled "Companies and the Law" in which Professor Brenda Hannigan writes on the rectification and construction of the articles of association as well as the changes introduced by the Companies Act (2006) with regard to the memorandum and articles. 

UK: England and Wales: the RTM Companies (Model Articles) (England) Regulations 2009

The RTM Companies (Model Articles) (England) Regulations 2009 were laid before Parliament yesterday and come into force on 9 November 2009. A copy of the Regulations is available on OPSI: see here (html) and here (pdf). In the accompanying explanatory memorandum (pdf) the following background information is provided: 

The Commonhold and Leasehold Reform Act 2002 s 73 and s 74 provided for the establishment of RTM [right to manage] companies. These are private companies limited by guarantee enabling long leaseholders in blocks of flats to take over the management of their building irrespective of any fault on the part of their landlord. Leaseholders must form a company to exercise the management functions.

The [Companies] 2006 Act introduced changes to the required constitutional documents of companies. It abolished the requirement for companies to have a separate memorandum of association and for companies to specify their objects. Objects formerly set out the purpose for which the company was created. It has been decided to keep objects for RTM companies as they should be restricted to RTM functions only.

All RTM companies are private companies limited by guarantee. Their memorandum and articles are currently prescribed by the RTM Companies (Memorandum and Articles of Association) (England) Regulations 2003 (SI 2003/2120.) The new regulations revoke this instrument, subject to transitional provisions which enable RTM companies incorporated before 9 November 2009 to use the old articles until 30 September 2010. Such companies are free to adopt the new articles before this date if they choose".

UK: the Companies Act (2006) final implementation

In March 1998 the Department for Trade and Industry published Modern Company Law for a Competitive Economy, the consultation paper which launched the reform of company law which culminated today in the final implementation of the Companies Act (2006). 

Whilst much of the 2006 Act has already been implemented, the provisions coming into force today include, inter alia, those concerning company formation, capacity and name; the company's constitution; company members and share capital; the annual return and company charges. For a general overview, see the implementation timetable published by the Department for Business, Innovation and Skills. Specific guidance has recently been published by DBIS concerning the changes to constitutional documents and the model articles. Further information is also available in the FAQ section of the DBIS website. 

Reflecting the final implementation of the 2006 Act, a revised edition of the Takeover Code code comes force today. Changes have also been made to the FSA Handbook. Certain provisions of earlier Acts - including the Companies Act (1985) and Companies Act (1989) - remain in force: see here for an overview.

UK: model articles under the Companies Act (2006) - BIS draft guidance published

The Department for Business, Innovation and Skills has today published draft guidance concerning the model articles under the Companies Act (2006). The model articles will apply to all new companies incorporating under the 2006 Act on or after 1 October 2009. The document also explains the differences between the model articles and those under the Companies Act (1985). It also contains information on other changes to companies' constitutional documents.

Note: copies of the model articles, and related resources, are available within the collection of links on the right of this page. 

UK: articles of association under the Companies Act 2006

The Companies (Model Articles) Regulations 2008 were laid before Parliament on 17 December 2008 and come into force on 1 October 2009. The Regulations contain the model articles for private companies limited by shares, private companies limited by guarantee and public companies.

The model articles provide default rules: they apply to companies formed on or after 1 October 2009 unless alternative provisions (in whole or part) are adopted. Further information is available in the accompanying explanatory memorandum. Non-statutory guidance (aimed at small companies) will be published in early 2009 on the DBERR website and will explain the differences between the default articles in the Companies (Tables A to F) Regulations 1985 and the new model articles. In addition, there are updated FAQs on the DBERR website.