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PP Lecture 4 constitution

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TOPIC 4 : THE CONSTITUTION OF THE COMPANY The Memorandum of Incorporation and Company rules: The Memorandum of Incorporation (MoI) – Founding document of a company – Sets out the rights, duties and responsibilities of the shareholders, directors and others in relation to the company (definition in section 1) – May deal with things not in the Act, alter an alterable provision of the Act, contain special conditions (see more on pg 36, Davis) – Must be consistent with the Act The company rules: Section 15(3) • Board of directors of the company may make rules relating to the governance of the company • Must be allowed by MoI • Must be made available to shareholders and filed with the commission (like the MoI) • Must be consistent with the Act and the company’s MoI Legal relationships flowing from the MoI and Rules: Section 15 (6) - The MoI is binding: (a) between the company and each shareholder; (b) between or among the shareholders of the company; and (c) between the company and (i) each director or prescribed officer of the company; or (ii) any other person serving the company as a member of the audit committee or as a member of a committee of the board, in the exercise of their respective functions within the company Legal relationships flowing from the MoI and Rules: • Consider the legal status of the MoI between the company and outsiders • Compare with : – Eley v Positive Government Security Life Assurance Co Ltd; – De Villiers v Jacobsd ...
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