The Articles Of Association ( Aoa ) Forms The Constitution Of The Company

1499 Words Dec 2nd, 2015 6 Pages
The Articles of Association (AOA) forms the constitution of the Company. It regulates the internal affairs of the company by defining the responsibilities of directors, the type of business and the means by which the shareholders exert control over the Board of Directors . This essay will illustrate the similarities and differences of the AOA to a contract and how it is special in nature.

Based on Section 14 of the Companies Act 1985 , AOAs are on the same level and to the same extent as if the company and shareholders had signed a contract. This is illustrated by Sterling J’s statement in Wood v Odessa Waterworks Company which reads: ‘The articles of association constitutes a contract not merely between shareholders and the company but also between the individual shareholders and every other’ . The equivalence of AOA to a contract is conclusive in New British Iron Co per Wright J’s judgment whereby it completely replaces or stands in lieu of the missing employment contract. This highlights the fact that AOA possesses contractual value and is contractual by nature. In simple terms, it is from its conception considered as an enforceable agreement and hence it is legally binding. As such, it is evident that AOAs serves all purposes of a regular contract.

AOAs however is a special legal document as it possesses distinct features that differentiates it from being an ‘ordinary’ contract . An ordinary contract has permanent signatories or perpetual parties while the…
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