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Company Law - Essay

  • Date Submitted: 01/12/2012 05:35 PM
  • Flesch-Kincaid Score: 43.5 
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Company Law, s.33 CA '06
            The introduction of the Companies Act 2006 has reformed the law regulating corporations which over the previous century has been subject to much criticism. This essay will show that in the main change to s.33 of the act has not achieved any noticeable reform in relation to the company constitution, challenging the notion that it heralds a new era in the corporate constitution for small closely held companies. The wording of s.33 (1) remains for the most part identical to that of its predecessor s.14 Companies Act 1985:
...the provisions of the company's constitution bind the company and its members to the same extent as if they were covenants on the part of the company and of each member to observe it.[2]
The only change being the insertion of Lord Wedderburns amendment “the company and”. The purpose of s.33 is to place into statutory form the terms that govern the contractual relationship created in the articles of association between the company, the members, and the board. The section creates a form unlike any traditional contract; it does not conform to the ordinary principles of contract law.
            The first category of issue created in the statute stems not from its contractual effect, but from the relations between the parties to the contract and who can enforce it. This has been the subject of differing judicial opinion and weight can be given to each conflicting proposition that s.33 created a contract between “the company and the members[6], and that it did not[7] and that it created a contract between the members inter se,[8]and that it did not[9]”. It is surprising that the inserted wording only deals with the first of these issues, the creation of a contract between the company and its members, as this had ceased to be the root of any controversy since  Hickman v Kent [10], where Astbury J, pinioned that “much of the difficulty is removed if the company be regarded,...,as being...


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