CHAPTER ONE

INTRODUCTION

1.1 Definition of Key Terms

Legal regime

A legal regime is a system of principles and rules governing something, and which is created by law.it is a framework of legal rules

Articles of Association

This is the company’s key constitutional document setting out rule for internal running of the company

Company

A commercial shall be formed by two or more persons who agree; by contract, to assign assets in cash or in kind to an activity for the purpose of sharing profits or benefitting from savings that may derive therefrom. The partners of the company shall accept to bear losses under the conditions stipulated in the Uniform Act

1.2 Background of the study

Historical position of Articles of Association at Common Law

Prior to the Joint Stock Company Act 1856, Companies were formed on the basis of a Deed of Settlement-an elaborated form of Partnership Deed. The Act of 1844 provided for the registration and the grant of corporate status. In return, the 1844 introduced a new constitutional framework based on two documents-memorandums of association and Articles of Association [Sealy; 1992].

The memorandum is the more fundamental document as its reflected in the case of Guinness v  and Corporation of Ireland.[1882,22ch.d,349].where it was held that if there is any conflict between memorandum and Articles of Association, Those of Memorandum shall prevail and by Statutory provision such as the Companies Act 1985,section 125 which makes it possible to entrench its rights  by writing into the memorandum with a  prohibition or restriction on their alteration .whilst the Memorandum proclaims the worlds the external aspect of its constitution ,the Articles are concerned with matters of internal organization which are primary of interest to its own members and officers for example the procedure for paying the subscription price for shares, and directors meetings ,the appointment ,removal of , remuneration of directors and dividend.

Thus the article determine how the power conferred on a company by the Memorandum of Association shall be exercised. The court in Ashbury Railway Carriage and Iron Co ltd v riche [1875cr, 7hl653], held that the memorandum as it was the area beyond when the articles of a company cannot go; inside that area the shareholders may make such regulation for their own government as they think fit

In Ashbury v Watson [1885,ch.d476 it was held  that the articles were subordinate to the memorandum  in the sense that they cannot confer wider power than the memorandum  and any alteration to the articles which conflict s with the memorandum is void to the extent of the conflict.

The Articles cannot be resulted to ,to fill in the Memorandum  in respect of any matter in respect of any  matter of which by law is required to be in the memorandum .the first set of articles in the modern form were set out in Table B of the Schedule to the Joint Stock Company Act 1856,and most modern form of companies now have articles which are based on some extent or the form set out in Table B.

The Courts regard articles as commercial document and apply a liberal construction to them .Jenkins in Homes v Keyes (1959,CH199 at 215,(A) described  their approach to wit that the articles of association  of a company should be regarded as a business document and should be construed so as to give them reasonable business efficacy ,where a construction tending to that result is admissible  in the language of the articles in preference  to a result  which would  or might prove unworkable .

Articles cannot be reflected by the courts .the power to alter is purely statutory .any alteration must be by a special resolution of the company and if there is any inconsistency between different parts of the article, the Court will follow ordinary cannons of construction and look to the whole seeking to achieve harmony between the different provisions and ensure compliance with the law

In Mc Neil v Mc Neil’s Neil’s sheep farming co .ltd (1955 nzlr.15).The company’s own articles provides for one man ,one vote but the  table a provision of one vote  per share also applied .The Court had that the express articles took precedence .In Rayfield  v Hands,(1960,ch.1).

The judge interpreted an article referring to directors as if it referred to members ,to enable a provision requiring them to put the plaintiff’s share at a fair value to take effect .The articles cannot contain anything which is illegal or contrary to public policy .In Re Victoria Onion and Potato Growers Association ltd. v Finnignan , Ryan and  Farrell ,(1922,VIR,384),an article was held void as being an unreasonable restraint of trade .

1.3 Scope of Study

The area covered by the work is within the confines of the UACCEIG adopted on 30 January 2014 and established in the official gazettes on the 4 of February 2014. It is also extended to common law system with the Companies Act 2006 being the principal instrument.

1.4 Statement of problem

It is true that the OHADA ON Commercial Companies and Economic Interest Groups here now referred to as UACCEIG regulates other document which are used in the formation of a company’s contract among which we have Articles of Association.

Nevertheless, the UACCEIG is not without problems. To begin with, the UACCEIG makes use of Articles of Association throughout but without actually defining It. Added to this, Article 121and 122 of the UACCEIG is problematic owing to the fact that it gives company executives unlimited powers in relation to corporate capacity and the extent of directors authority.

1.5 Research Questions

1 form and content of Articles of Association

2 failure of non-compliance with formalities of Article of Association

3 what are the functions of Articles of Association

4 what policy recommendations can be made for reforms

Check Out: Law Project Topics with Materials