TOPIC ONE

ARTICLES OF ASSOCIATION

In this guide, we shall be considering the articles of association of a company, the content of

the articles of association, and the procedure for alteration of the articles of association.

1.1 What are Articles of Association?

Articles of Association is an incorporation document that contains the rules that bind

and guide the activities of the company. It serves as an internal rule book for members

of the company. Section 32 of the Companies and Allied Matters Act, 2020 (CAMA)

provides that “a company shall have articles of association prescribing regulations for

the company.”

To this end, articles of association is a single document, paragraphed and numbered

consecutively, and signed by all the subscribers to the Memorandum of Association (Memo).

The Articles serve the following purposes:

a) The articles serve as the internal regulation of a company. It states the manner in which

affairs of the company are conducted.

b) The articles govern the exercise of powers contained in the memo.

 c) The articles regulate the powers of the members of the company among themselves.

1.2 Content of Articles of Association

CAMA provides that model articles 1 can be adopted by a company or altered to suit the

company’s preference. Models articles are articles prescribed by the Minister, as

prescribed under Table A, Schedule 1 of CAMA 2004. For public company limited by

shares Part 1 contains the model articles, private company limited by shares, part II,

company limited by guarantee, part III and unlimited company part IV of Table A provide

the respective models.

The relevance of this is in the event of conflicting provisions in the Articles of a

company. Where such conflicts arise, the model articles prevail unless it is specifically

ousted by the Articles of the company. The model articles also serve as a guide where

the main articles are silent.

The content of the Articles vary depending on the type of company to be incorporated.

As a general rule however, the Articles are printed, in a single document, signed by the

subscribers to the Memo, attested to by at least one witness, stamped and registered

with the Corporate Affairs Commission (CAC). Some provisions of the Articles of a

private company limited by shares: Appointment and removal of Directors, Secretary,

meetings, notices, classification of shares, dividends, voting, etc.

1
See s.33 and 34 CAMA 2020
1.3 Alteration of the Articles of Association

Section 53 of CAMA provides for alterations of the articles of a company. Alteration in

this sense refers to modification, deletion, or addition to the articles. For a valid

alteration to occur, such alteration must be by special resolution, at a general meeting

of the company, where 21 days notice has been issued in respect of such alteration. In

addition, the alteration must be acceded to by ¾ majority of members present or voting

via proxy. The said alteration must be registered with CAC within 15 days’ of the

alteration. Where a company defaults in filing the altered articles within the stipulated

period, the company shall be liable to pay default fees. Note however that no court shall

have jurisdiction to extent the period for filing any changes in the articles of association.

Every alteration so made and filed shall be deemed to be the articles originally filed with

CAC.

For alteration to occur, the following should be noted:

a) The alteration should not be made to increase the liability of members.2

b) The alteration must not be in conflict with CAMA, the Memo, or any general law in

force.3

c) The alteration can be done by the courts as a remedy to minority oppression. 4

d) Every inconsistent alteration must be sanctioned by the Courts.

e) Where the alteration affects special rights attached to a class of shares, the consent

of shareholders of that class of shares must be obtained. Where the alteration is

2
S.54(b)CAMA 2020
3
S.53(1) CAMA 2020
4
See ss.343-356 CAMA 2020
 done without their consent, not less than 15% of them can approach the court

within 21 days to have the alteration revoked.

f) The alteration must be in good faith, for the benefit of the company.

The courts would usually not interfere with alterations of the articles unless it is mal fide,

fraudulent, discriminatory, or an abuse of powers5.

What happens if the alteration of the articles is in breach of a contract?

The position of the law is that the articles bind the company and her members, the company

and her officers, and the members among themselves. Thus, where an alteration is made in

breach of a contract between the company and another, the other party can sue if the contract

binds him as a member of the company and not as an employee of the company.

5
See the cases of Brown v. British Abrasive Wheel Co.ltd (1919)1Ch,290; Shuttleworth v. Cox Bros & Co
Ltd(1927)2KB 9
 TOPIC TWO

CONTRACTUAL EFFECT OF MEMORANDUM AND ARTICLES OF ASSOCIATION

What then is the legal effect of the memorandum and articles of association of a company?

Section 46 of CAMA, provides “the memo and articles when registered, shall have the effect of

a deed between the company and its officers and between the members and officers

themselves, whereby they agree to observe and perform the provisions of the memo and

articles as altered from time to time, in so far as they relate to the company, members, or

officers as such.” To this end the memo and articles:

1. Bind the company to the members- where the provisions of the articles limit the voting

rights of each shareholder to 100, and shareholder A has above 100 because

shareholder B has transferred his shares to him, A can exercise voting rights above 100

as a result of the transfer.6

2. Bind the members to the company-where the articles provide that all disputes between

the company and its members must be submitted to arbitration, X being a member of

the company cannot sue the company without referring the dispute to arbitration. 7

3. Bind the members among themselves (inter se)- in Obiokoya v. Ezenwa 8 the defendants

sought to remove the plaintiff as a Director of the company even though the articles of

the company forbade same. The court held that the removal was wrong and squashed

it.

4. Do not bind third parties- third parties to the company refer to employees of the

company or any other person who is not a shareholder of the company. As such, anyone
6
See Pender v. Lushington (1877)1 Ch 70
7
See Hickman v. Kent Romney Marsh Sheep Breeders Association (1915)1 Ch 881
8
(1964) 2 AWLR 133
 who is either a Director (not being a member), a Solicitor, or external Auditor is a third

party as regards the memo and articles of the company. This provision upholds the

doctrine of privity of contracts which precludes third parties from suing on a contract to

which they are not a party to. The above position was given judicial flavor in the cases of

NIB Investment (West Africa) Ltd v. Omisore9 and Craven Ellis v. Canons Ltd10

9
(2006) 4 NWLR (pt 969) CA 17
10
(1936) 2KB 403