Constitutional Contract

Under the Companies Acts, the constitution (comprising the memorandum and articles of association) forms a statutory contract between members and the company, enforceable in respect of rights arising from membership. The Companies Act 2014 re-enacts this principle, extending its application to statutory governance provisions. Members may enforce the constitution against the company or other members but only regarding rights as shareholders, not private or director-related capacities.

Shareholders’ agreements, private contracts regulating members’ rights, can supplement but not override the constitution. Unlike constitutions, they remain private and unamendable by company resolution.

Constitutions can be amended by special resolution, binding future members but not imposing new shareholding or financial obligations on existing members without consent. Alterations must serve the company’s good faith interests, though courts scrutinise oppressive or extraneous changes. Minority shareholders may challenge alterations, requiring court review to assess fairness.

Class rights within share structures are protected, and their variation requires strict adherence to constitutional or statutory procedures, including approval by 75% of the class. Dissenting members (holding at least 10%) can petition the court to cancel variations deemed unfairly prejudicial.

Constitutional amendments must be registered with the Companies Registration Office (CRO) within 15 days, ensuring public transparency and compliance with statutory obligations.

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