Secretarial practice

Bibliographic data

Monograph

Identifikator:: 1828236004

URN:: urn:nbn:de:zbw-retromon-249926

Document type:: Monograph

Title:: Secretarial practice

Edition:: fourth edition

Place of publication:: Cambridge

Publisher:: W. Heffer & Sons Ltd

Year of publication:: 1930

Scope:: viii, 987 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Articles of association

Collection:: Economics Books

Legal Effect of Articles. Company and its Members. Members Inter se. 2A SECRETARIAL PRACTICE deprive them of that right is invalid [Peveril Gold Mines 1898), 1. Ch. 122]. In the same way an article seeking to take away the right of shareholders to requisition a meeting, or to inspect the company’s books would be wholly inoperative. The legal effect of articles of association, as a whole, requires to be clearly understood. S. 20 (1) of the Act provides that ‘subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles,” and this section as judicially interpreted is the chief source of informa- tion on the point. The questions which require to be con- sidered may be stated as follows: (1) What is the effect as between the company and the members? (2) What is the effect as between the members themselves? (3) What is the effect as between the company and outsiders? (1) As between the company and its members, it is clear that the members are bound to the company, and a series of decisions has firmly established the proposition that the company is similarly bound to the members. It is to be observed that the relationship of the member to the company is more than a simple contractual relation. He is bound as though he had covenanted with the company under seal. The practical result is that the company can sue a member to enforce the obligations of the member to the company under the articles. Thus the company can sue a member for calls, or to enforce a lien, or for many other purposes. Similarly, a member can sue the company if the company acts in con- travention of the articles, e.g. in forfeiting shares without complying strictly with the relevant terms of the articles. The rights, however, in respect of which a member can sue the company are the rights merely with which he is endowed as a member of the company. When, although a member, he acquires rights in another capacity, even as a director, other principles apply (see 3, below). (2) As between the members themselves the position appears to be different. It is true that in Wood v. Odessa Waterworks Company (1888, 42 Ch. D. 636), Stirling, J., said that the articles of association of a company constitute a contract not merely between the shareholders and the company, but between each individual shareholder and every other. But the words of the section hardly bear the construction that each shareholder has contracted with every

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