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Untitled Document
Legislative changes introduced by the Companies Act 1989
The following is a brief summary of the major changes introduced since 1989:
1. The 1989 Act allows a company to dispense with a long detailed statement of its main objects in its memorandum of association and provides that a company may simply say that “The object of the Company is to carry on business as a general commercial company.” It is normal practice to include within the revised memorandum a comprehensive statement of supplemental powers in addition to the general commercial object clause to back this up.
2. A company may need to alter its articles of association to take advantage of the elective regime introduced by the 1989 Act. For example if it wishes to dispense with the need to hold annual general meetings it is best practise to ensure that the articles are amended so that they do not require any matters to be dealt with at such a meeting.
Commercial changes:
Aside from the reforms introduced by the 1989 Act there will be other reasons for revising the memorandum and articles of association dependent on their age. For example:
1. A company’s memorandum may not provide full powers to provide pensions and other benefits to directors, employees and their families.
2. The articles may contain restrictions as to minimum and maximum number of directors that are no longer required or to the maximum number of permitted shareholders.
3. The company may not have power to purchase its own shares or provide financial assistance for the acquisition of its own shares.
4. A director may not be entitled to appoint an alternate to attend at board meetings in his absence.
Group companies
Groups of companies which include a number of wholly owned subsidiaries may benefit from the revision and updating of the memorandum and articles of those subsidiaries to provide:
1. One standard up-to-date set of memorandum and articles for all wholly owned subsidiaries, making the secretarial administration of those companies simpler and more economical.
2. The parent company with extensive powers over the board of directors of the subsidiary. Enabling the parent to intervene quickly and decisively in the affairs of the subsidiary if the circumstances warrant it.
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