Statutory Requirements Regarding to Articles



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Statutory Requirements Regarding to Articles



Articles must be:

a) printed;

b) in numbered paragraphs;

c) signed by the subscribers in the presence of at least one witness.

The Legal Effect of the Articles

Section 14 states that the memorandum and articles bind the company and the members as though signed and sealed by each member, and as they contained covenants (i.e. promises under seal) by each member to observe their provisions. In reality the articles of association are a contract between the company and its members in respect of their ordinary rights as members. The effect of the articles is therefore as follows:

a) The company is bound to the members in their capacity of members.

b) The members in their capacity of members are bound to the company.

c) The members are contractually bound to each other.

d) The company is not bound to any person, except to members in their capacity of members.

Each of these will be considerer in turn. It should, however, be noted as a preliminary that the precise effect of the statutory provisions has been the subject of considerable controversy and there have been many apparently conflicting decisions by the courts.

(Based on:M.C. Oliver and E.A. Marshall, Company Law)

 

III. The following sample of Articles of Association will help you to understand the nature of organizational legal framework and Articles structure, and suppose it will help you in your future carrier.

THE COMPANIES LAW, CAP. 113

PRIVATE COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATIONS

NORTH STAR LIMITED

1. The Company is a private company and consequently:

a) The right to transfer shares is restricted in the manner hereinafter prescribed.

b) The number of the members of the company (exclusive of persons who are in the employment of the company and of persons who having been formerly in the employment of the company were, whilst in such employment and have continued after determination of such employment to be members of the company) is limited to fifty. Provided that where two or more persons own one or more shares in the company jointly they shall for the purpose of this Article be treated as a single member.

c) Any invitation to the public to subscribe for any shares or debentures of the company is prohibited.

2. Any branch or nature of business for which there is either an express or an implied authorization by the memorandum of Association of the Company or by these Articles to be undertaken by the company may be undertaken by the Directors at such time or times as they would deem fit and, furthermore, may remain by the Directors in abeyance, irrespective of whether such branch or nature of business has actually started or not, if the Directors would deem fit not to start or not continue with such branch of nature of business.

3. The company shall have a first and paramount lien on every share for all moneys (whether presently payable or not).

4. Notwithstanding any other provision in these Articles, the following transfers of shares to members of the company or not and either by sale, exchange, gift, transmission by law or otherwise are freely permitted and the Directors shall forthwith approve any such transfer and shall proceed with the registration of same in the Register of members of the company:

a) Transfer to father, mother, spouse or child of the transferor (in these Articles called “members of the family”);

b) If the member is one or more trustees, transfer to another trustee or trustees if any previous one or ones were replaced;

c) Transfer by an individual member to a company controlled either together or separately by such member and/or by any members of his family and/or by a company controlled by them or any of them. For the purposes of this paragraph a company is deemed to be controlled if the controlling person, physical or legal, holds herein more than 50% of the votes.

5. All notices and other communications relating to a General Meeting and which each member is entitled to receive shall also be given to the auditors of the company.

6. No business shall be transacted at any General Meeting unless a quorum of members is present at the time when the Meeting proceeds to business. Save as herein otherwise provided or under the present in force Company Law, Cap. 113 of the Republic of Cyprus, two members present in person or by proxy holders at least 51% of the voting shares shall forum a quorum.

7. At any General Meeting a resolution put to the vote of the Meeting shall be decided on a show of hands unless a poll is before or on the declaration of the result of the show of hands) demanded:

a) by the Chairman or

b) by at least one member, present in person or proxy.

8. The chairman of general meeting has no seconds or casting vote.

9. a) The number of the Directors shall be from one to seven and may be increased or reduced by an ordinary resolution of the company.

b) The number of the first Directors within the aforesaid limits and their names shall be determined by the subscribers to the Memorandum of Association of the Company.

c) The aforesaid first Directors shall hold their post until the first Annual General Meeting.

d) The Directors elected at an Annual General Meeting shall hold office until they resign or cease to satisfy the requirements of Companies Law relating to persons holding the office of director.

10. It shall not be necessary for a Director to be registered holder of shares in the company in order to be a Director, and such case he shall be entitled to receive notice and attend all the General Meetings of the Company.

11. The Directors may exercise all the powers of the company, to borrow or raise money, to mortgage or charge the undertaking of the company, its property and uncalled capital, as well as to issue debentures, debentures stock and other securities for any debt, loss or obligation of the company or of any other third party.

12. Any person acting as Alternate Director shall be deemed to be an officer of the Company and he shall be personally liable to it for his acts and omissions and his remuneration of the Director appointing him and shall consist of such part of such remuneration as it may be agreed between the appointer Director and his Alternate.

13. The seal of the Company only be used with the authority of the Directors and every instrument to which the seal shall be affixed shall be signed by one Director or Alternate Director, or by the Secretary.

14. A notice may be given by the Company to any member either personally or by sending it by post to him or to his registered address or (if he has no registered address within Cyprus) to the address, if any, within or out of Cyprus, supplied by him to the company, for the giving of notice to him. Where a notice is sent by post, service of the notice shall be deemed to been effected in contained in an envelope, duly addressed and duly stamped and posted by double registered letter and shall be deemed to have been received in the case of a notice of a meeting at the expiration of 72 hours after posting and in any other case at the time at which the letter would be delivered in the ordinary course or post.

Names, addresses and description of subscribers:

(Based on:current Articles of Association)

 

ACTIVE VOCABULARY

alternate director amendment appearer Articles of Association (incorporation) (American Charter; Australian Constitution) board of directors by proxy duly authorized representative Companies Law fair value first and paramount lien first director     for the purposes of this Clause in somebody’s absolute discretion in the widest sense of the word ipso facto general meeting of the Company legal lien legal personality limited liability company   member (shareholder; participant) of the Company managing director notice of sale notwithstanding any other provision in these Articles power (letter) of attorney private company limited by shares public company public subscription for any shares or debentures register of the members (share holders) regulations Republic of Cyprus seal of the Company separate vote share (stock) certificate share transferring to father, mother, spouse or child show of hands single person sole shareholder statutory rule to acquire to alienate to be in the employment of (for) the Company subscriber to be valid and effective to deem feet to form a quorum to issue shares to put to the vote to render the services to transfer any deal to transfer a share uncalled capital   winding up (period) лицо, исполняющее обязанности директора поправка (изменение) к тексту устава заявитель устав предприятия (Общества)   совет директоров (правление) по доверенности полномочный представитель Закон об акционерных обществах сходная цена/стоимость первое и преимущественное залоговое право директор, исполняющий свои обязанности до момента проведения первого общего собрания участников Общества; для целей положений настоящей статьи; в рамках абсолютных полномочий (по своему собственному решению) в самом широком значении этого слова   в силу самого факта общее собрание акционеров (участников) Общества   залоговое право в рамках его юридического значения правосубъектность акционерное общество с ограниченной ответственностью участник (акционер) Общества   управляющий директор уведомление о продаже независимо от любого иного положения настоящего устава доверенность закрытая акционерная компания (Общество)   Общество открытого типа открытая подписка на акции или облигации   реестр участников Общества   нормы и правила (устав предприятия) Республика Кипр корпоративная печать Компании раздельное голосование сертификат акции (доли) уступка акции в пользу отца, матери, супруга (и) лица, уступающего эту акцию голосование поднятием руки лицо с правом единственного голоса единоличный акционер (собственник) норма статутного права приобретать в собственность отчуждать находиться в трудовых отношениях с Компанией на условиях найма подписчик, подписант иметь юридическую силу и значение считать приемлемым формировать кворум собрания выпускать акции ставить на голосование оказывать (предоставлять) услуги одобрять (утверждать) любую сделку уступать (передавать) акцию не истребованная от акционеров часть подписного капитала ликвидация (ликвидационный период)

IV. Translate the following text from Russian into English and be ready for its discussion on the basis of active vocabulary, key terms quiz, review and discussion questions.



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