Professional Documents
Culture Documents
18 January 2016
DISCUSSION
ow do companies function
nd what are their powers?
MODEL ARTICLES
ompanies (Model Articles) Notice
SIGNIFICANCE
+Section 115
provides companies with the rights powers and capacity of a natural person
+Certain Articles
are mandatory
liability: s 83
Shareholding on formation of company: s 85
Company name: s 81
Limit on members
Capital & Initial
Section 98 provides
for a seemless transfer of previous Memorandum to new Articles of Association
Section 86 Enforceability as a statutory contract
Sections 87 & 88
Alteration of Articles
Liability
Failure to
Breach of
Fraudulent
AT COMMON LAW
fraud or dishonesty
1911)
Keung (PC 1988)
Ming (CA 1999)
legal duty
Horne (English CA 1933)
Trading Co v The Neptune (HC 1986)
or sham
Harper (Australian HC 1981)
CUHK Business School
+Conduit for
-Re Darby (KB
-AG v Chan Nai
-HKSAR v Leung Yat
+Avoidance of
-Gilford Motor v
-Bakri Bunker
+ Use as puppet
-Ascot Investments v
Council (English
AMENDING ARTICLES
+ Rayfield v Hands (ChD 1960)
+ Ng Kin Kenneth v Hong Kong Football Association (HC 1994)
DISCUSSION
W
hat do we call people who set up companies and do they
have any duties and liabilities to investors?
C
an companies enter into contracts before
th
eir incorporation?
CUHK Business School
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PROMOTERS
- Definition at common law
undertakes to form company: active or passive
- Fiduciary duties
- must not profit without disclosure
- Remedies
- rescission
- accounting for profits
Erlanger v New Sombrero Phosphate Co (Eng CA 1878)
Gluckstein v Barnes (Eng CA 1900)
CUHK Business School
11
PRE-INCORPORATION
CONTRACTS: s 122
(1) This section applies if a contract purports to have been made in the name or on behalf
of a company before the company was incorporated.
(2) Subject to any express agreement to the contrary
(a) the contract has effect as a contract entered into by the person purporting to act for
the company or as an agent for the company; and
(b) the person is personally liable on the contract and is entitled to enforce the contract.
(3) After incorporation, the company may ratify the contract to the same extent as if
(a) the company had already been incorporated when the contract was entered into; and
(b) the contract had been entered into on the companys behalf by an agent acting
without the companys authority.
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12
LIMITS OF s122
Despite subsection (2)(b), if the contract is ratified by the
(4)
the
the
person
Wha
t is the position at common law?
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13