ICAEW BL · Chapter 8 · Question 7 of 10
The articles of Meridian Ltd state that 'Ainsworth & Co shall act as the company's solicitors'. Gerald, a partner in Ainsworth & Co, is also a shareholder. The company appoints different solicitors, and Gerald sues to enforce the article. Will he succeed?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) No, because under s33 the articles are a contract enforceable only in respect of members' rights in their capacity as members
Explanation
Under s33 Companies Act 2006, the articles bind the company and its members as if they were a contract. However, they can be enforced only for rights held in the capacity of member (Eley v Positive Government Security Life). The right to act as solicitor is an outsider right, so Gerald cannot enforce it even though he holds shares. The articles are binding, but only within these limits.
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