The constitution of the company & Law

The other very important issue is on the amendment of the constitution of the company. It is not clear from the circumstances of the case if the amendment was done through a resolution by the shareholders of the company or by the directors. However according to the Company’s Act. S. 136, a company can adopt a constitution if all persons registered as members have agreed in writing to the contents of the constitution. In addition upon registration of the company, the company may pass a special resolution authorizing the adopting of the constitution or the court may make orders of such adoption . Looking at the Life Insurance Act 1995, it explains in great depths how the benefit fund works. As far as amendments of the constitution are concerned Subsection (2) states clearly that the company is at liberty to repeal or modify the constitution either in whole or some parts of the provisions of the constitution. However this ought to be done through a special resolution by both the directors and the shareholders in a general meeting of the company. The circumstances in this case appear a little vague as they do not state clearly whether there was a special resolution that effected the amendment in the constitution which gave the company the discretion to decline to pay their customers insurance any time they deemed fit so to do. Therefore in absence of such a special resolution such an amendment would be vague and a nullity in law. In addition the provisions of this amendment are vague in that they do not give the special circumstances in which the company may deny a customer their insurance benefits. In law the courts while interpreting such vague and ambiguous clauses normally use the contraproferentum rule whereby they interpret the ambiguous clauses against the maker. In this case the clause may be interpreted against the company due to its ambiguity and vagueness. It is important to note that in some cases the company may need the permission of the court before amending or modifying the constitution of the company in any way . In some special cases a special resolution by members is not sufficient to allow for the amendment of the constitution. It is required that in furtherance to the special resolution by members that a further requirement in accordance with the provisions of the constitution be fulfilled. Other requirements are that upon such modification of the constitution then the amended copy out to be presented to the registrar of companies within a period of 14 days. Now going back to the facts of the case, in the year 2007 the company brought to an end Jack’s contract as the financial director. Now as defined earlier, a contract is a legal agreement between two or more parties that give rise to a legal cause in case any part or the contract as a whole is violated. Now at the inception of the company Jack entered a contract with the company where he was appointed as the company’s financial director. Although there are not much details as far as the contract is concerned it is assumed that Jack and the company entered into a legal agreement by virtue of the contract. The position of the law is that a contract can only be terminated either by completion of the agreement between the parties or by either party to the contact but with sufficient notice to the other party. In this case the contract between Jack and the company had not yet come to an end and there was no notification by the company to Jack notifying him of their intention to end the contact with him. In this caser therefore Jack may sue for damages for the branch of contract by the company. On the issue of being a permanent director the company may argue that such an appointment was made by the company secretary (Belinda) without the consultation of the directors of the company . However it must be remembered that the fact that the company refused to pay Jack the money on the basis of the constitutional amendment means that they had approved and consented to all the provisions of the constitution including the permanency of the position that Jack was holding and that he could only be dismissed through misconduct. Basing the argument on that line of thoughts Jack has a case against the company for terminating his contract even though his position was permanent and yet he was not involved in any misconduct.

Sarah from Law Aspect

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