When a company is incorporated one of the key formation documents is the company constitution. The format of the constitution will depend on the type of company.
- LTD Company
- One document constitution with supplementary regulations regarding the internal rules and regulations based on Parts 3 & 4 of the Companies Act 2014
- DAC, CLG, ULC & PLC
- Two documentation constitution
- Memorandum of Association – contains the objects and powers of the company
- Articles of Association – similar to the supplementary regulation of an LTD setting out the internal rules and regulations of the company
The Companies Act 2014 transition period gave companies the opportunity to adopt a new constitution to reflect the new provisions of the Companies Act 2014. Approximately 25% of companies adopted a new constitution this transition period.
If you did not convert your company it will have been automatically converted. However this automatic conversion did not update the companies’ existing Memorandum & Articles of Association or issue the company with a new constitution so it may be worth considering updating to a new constitution which is in accordance with the Companies Act 2014
Some of the reasons for choosing to adopt a new constitution now:
- Company has not updated its constitution in many years
- Activates of the company have changed
- Renewing Bank facilities,
- Due diligence being performed,
- Shareholders want the company to be brought up to date,
- The company requires the power of a new provision in the Companies Act 2014 which is not in your existing constitution
If you are considering adopting a new constitution then the new constitution should be prepared and certain provisions should be included in the constitution including a number of provisions regarding the company:-
- Authorising directors to allot shares
- Dis-application of pre-emption rights
- Provide for the borrowing powers of the company
Procedure
The procedure for adopting a new constitution requires the members to approve the new constitution that has been prepared by the directors. The members must pass a special resolution at an AGM, EGM or pass a written resolution. A G1 form should be filed in the CRO with the new constitution.
How Can CLS Help
We have huge experience in drafting constititions and preparing the necessary minutes, resolutions and CRO forms and if you do require our assistance please contact one of the team on 059 9186776 or send us an email.
Please Note:
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.