Introduction
I have previously written many articles on corporate law. One of the articles covered a company’s constitutive documents. According to section 2 of the Companies and Other Business Entities Act (Chapter 24:31) or COBE Act, constitutive documents in relation to a company means its memorandum and articles of association.
Articles of Association
This is covered under section 81 of the COBE Act. According to section 81(1), articles of association signed by the subscribers to the memorandum of a company and prescribing its internal rules may be registered with the company’s memorandum.
According to section 81(2) a company’s articles of association may adopt all or any of the internal rules contained in the following tables in the Sixth Schedule to the COBE Act:
- Table A for public companies.
- Table B for private companies limited by shares.
- Table C for private companies limited by guarantee.
According to section 81(3):
- In the case of a public company, if articles of association are not registered with the memorandum of association, or if articles of association are registered in so far as the articles do not exclude or modify the internal rules contained in Table A, those internal rules shall, so far as applicable, be the internal rules of the company in the same manner and to the same extent as if they were contained in duly registered articles
- In the case of a private company, if articles of association are not registered with the memorandum of association, or if articles of association are registered in so far as the articles do not exclude or modify the internal rules contained in Table B, those internal rules shall, so far as applicable, be the internal rules of the company in the same manner and to the same extent as if they were contained in duly registered articles.
According to section 81(5)the articles shall be in English or any other officially recognised language and shall be signed and dated by each subscriber to the memorandum in the presence of at least one attesting witness and opposite every such signature of a subscriber or a witness there shall be written in legible characters his or her full name, occupation and full residential or business address.
Alteration of Articles of Association
There are times when it becomes clear that a company’s articles of association does not cover certain desired situations. These situations may not have been anticipated or new shareholders may prefer certain internal rules. Some of the common situations include shareholding or corporate governance such as the appointment of directors.
Section 81(6) of the COBE Act provides for the alteration or addition to a company’s articles of association. According to the section, subject to the conditions contained in its memorandum, a company may by special resolution alter or add and any alteration or addition so made in the articles shall be valid as if originally contained therein, and be subject in like manner to alteration by special resolution.
Special resolution to amend Articles of Association
It is a requirement in terms of section 178 of the COBE Act to register any special resolution. If follows that within one month after the passing of any special resolution, including that to amend a company’s Articles of Association, a copy of that resolution shall be transmitted to the Registrar who shall register that resolution and that resolution shall be of no force or effect until it is so registered, provided that on registration the special resolution shall be of force or effect from the date it was passed.
Special resolutions are registered with the Registrar through form CR8 (Special Resolutions).
Conclusion
The Articles of Association is one of the constitutive documents of a company and constitutes a company’s internal rules. It can be amended in terms of section 81 of the COBE Act. Any special resolution passed for that purpose ought to be filed with the Registrar through form CR8 in terms of section 178.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), ACCA (Business Valuations) MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, commercial arbitrator, registered tax accountant and advises on deals and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He was recently appointed to sit on the Council of Estate Administrators in Zimbabwe. He writes in his personal capacity. He can be contacted on +263 772 246 900 or ghofisi@hofisilaw.com or gohofisi@gmail.com. Visit www//:hofisilaw.com for more articles.
