ARTICLES OF ASSOCIATION 
Articles of association commonly contain many clauses 
which simply reproduce statute law. Such clauses are of 
course surplusage, although for the sake of completeness, 
it is desirable to insert them. 
For the Stock Exchange requirements as to articles of 
association, see Appendix D. 
It may be pointed out that the word ‘regulations,’ where it Nature of 
occurs in the articles of a company, may or may not be Articles. 
equivalent to ‘articles’ [Quin & Axtens v. Salmon (1909), 
A.C. 442]. In other words, a company may have ‘regulations’ 
other than its articles; these may be constituted by minutes 
of the board, or by resolutions carried in general meeting. 
{t must, however, be borne in mind that the articles -can 
only be altered by special resolution and a resolution of the 
board, or an ordinary or extraordinary resolution of the 
company in general meeting, if inconsistent with the articles, 
would be ineffective. The articles form a code of regulations 
for the internal management of the company, whilst the 
memorandum is the charter of the company and defines its 
powers. The respective functions of the two documents are 
clearly described in the extract from the judgment of Lord 
Cairns, in Ashbury Railway Carriage Company Vv. Riche 
(1875, L.R. 7 H.L. 653), cited in Chapter III. 
The provisions of the articles cannot, therefore, extend the 
powers of the company. It is useless, for example, for an 
article defining the powers of directors to clothe them with a 
power which the company itself does not possess. Thus, to 
take a simple instance, if a company, which, not being a 
trading company, has no implied power to borrow money, 
has not in its memorandum taken a power to borrow, it is 
clear that an article giving the directors power to borrow 
will be wholly inoperative. Again, if the memorandum of 
a company defines the rights attaching to different classes 
of shares, and itself contains no provisions for the alteration 
of those rights, whether by reference to the articles of associa- 
tion or otherwise, it is useless for the articles to provide that 
those rights can be altered by special resolution, or by any 
specified majority of the shareholders. 
Neither can the articles deprive members of rights given 
to them by statute, and therefore a provision in the articles 
that, in case of a reconstruction, dissenting shareholders 
shall not have the rights given them by s. 234 is invalid 
[Payne v. Cork Co. (1900), 1 Ch. 308]. Similarly, share- 
holders having in certain circumstances a statutory right 
to present a winding-up petition, an article purporting to