Contract between company and members


Section 33 of the Companies Act 2006 provides for a ‘statutory contract’ between the company and its members. It is this contact that is the subject of much controversy and confusion which has spanned over a period of decades. The main controversy focuses on the question of whether the contract can be enforced by members to ensure that a right associated with them in another role, such as the right given to a director who is also a member. This question of enforcement and the long standing controversy will be examined in this essay.

Enforcement Of S.33 Companies Act 2006

Companies Act 2006, S.33 Effects of company’s constitution

  1. “The provisions of a company’s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions”

This is a substantial re enactment of previous sections, however, the modern formulation does finally lay to rest one previous uncertainty – “that the constitution constitutes a contact between the members and the company, and between the members inter se The other remaining question, which S. 33 has not resolved is to what extent are ‘outsider rights’ enforceable by members ? In another words each shareholder can be held liable to each other under the articles.

In Bisgood v Henderson’s Transvaal Estates Ltd Buckley LJ stated that “The purpose of the memorandum and articles is to define the position of the shareholder as shareholder, not to bind him in his capacity as an individual.”

However, it appears that there are two distinct lines which contradict each other. One line suggests that a member cannot enforce rights other than membership rights or ‘insider rights’, and the other suggests that a member may enforce ‘outsider rights’ as long as he sues the company in his capacity as a member, and not as an outsider. In the case of Eley v Positive Government Security-Life Assurance Co Ltdin the articles it stated that Mr. Ely was to be the company’s solicitor. Mr. Eley later became a member. The directors then chose to use other solicitors and Eley sued for breach of the statutory contract on the term of the articles. It was held that Eley could not enforce the provision in such a way, as he was attempting to enforce his rights as solicitor, not as member. The court rules that the provision in the articles was “either a stipulation which would bind the members, or else a mandate to the directors. In either case it is a matter between the directors and shareholders, and not between them and the plaintiff”

This decision was later supported in the case of Browne v La Trinidad where a pre-incorporation agreement specified that Browne should become a director of a company for a specified length of time. The agreement later became part of the articles, but no specific contract between Browne and the company was drawn up. The company sought to remove Browne from office before the agreed time, and it was held that it was free to do so. Lindley LJ stated: “it would be remarkable that, upon the shares being allotted to him, a contract between him and the company, as to a matter not connected with the holding of shares, should arise.”

The opposing position is illustrated in the case of Salmon v Quin & Axtens Ltd. The articles provided that Salmon, who was one of the two managing directors, could veto board decisions. Salmon used this right, but the company ignored the veto. Salmon sought an injunction, and it was held that the company had acted on a decision which was taken unconstitutionally, and Salmon had the right to see that the company acted in compliance with the constitution. This was a right afforded to him as a member. Salmon was then able to indirectly enforce his ‘outsider rights’ by suing as a member.

The leading case in this area, which tried to reconcile the two ‘opposing’ lines of cases was the classic authority of Hinkman v Kent or Romney Marsh Sheep-Breeders’ Association. “It is difficult to reconcile these two classes of decisions and the judicial opinions therein expressed, but I think this much is clear, first, that no article can constitute a contract between the company and a third person; secondly, that no right merely purporting to be given by an article to a person, whether a member or not, in a capacity other than that of member, as, for instance, as solicitor, promoter, director, can be enforced against the company; and, thirdly, that articles regulating the rights and obligations of the members generally as such do create rights and obligations between them and the company respectively.”

From this statement it seemed that the issue of ‘outsider rights’ would not be enforceable, whether or not the ‘outsider’ was a member. However, much academic debate ensued, and three main explanations of the case were put forward by Gower, Lord Wedderburn, and Goldberg. Firstly, Gower proposed that ‘outsider’ rights can never be enforced ie. The Hinkman principle. Secondly, Lord Wedderburn gave the view that ‘outsider’ rights can be enforced by a member as long as he sues as a member, using Salmon as support. The third, Goldberga ‘middle way’ is proposed.

Gower’s view is based on a more traditional view in that S. 33 contract is: ‘the memorandum and articles have no direct contractual effect in so far as they purport to confer rights and obligations on a member otherwise than in his capacity of a member’ This view can be interpreted as the strictest interpretation of the law in this area, although it is consistent with the dicta in Hinkman, it fails to adequately explain cases such as Salmon v Quin & Axtens. Gower seems to ignore these inconsistent cases, and instead bases his view on a theory of law, instead of how it has operated in practice.

In contrast, Lord Wedderburn opinion on the matter is dually the most famous, and most liberal. He argues that ‘a member can compel the company not to depart from the contact with him under the articles, even if that means indirectly the enforcement of ‘outsider’ rights vested in third parties or himself, so long as, but only so long as, he sues qua member and not qua ‘outsider’

In Wedderburn’s opinion, if as a member sues as a member, he can always enforce ‘outsider’ rights. His explanation of those cases where ‘outsider’ rights have been unenforceable is the technical one in which the ‘outsider’ choses not to sue in his capacity as a member. However, the problem with this approach is that in essence it goes against the decision and dicta in Hinkman, which purported to finalise the debate on the issue by reviewing the two lines of cases.

For this reason, Wedderburn’s argument is seen as being overly wide. Yet, Gregoryagrees with Wedderburn’s view, on the basis that the dicta in Hinkman is obiter. He argues that the judge in Hinkman failed to consider cases which, prior to 1915 (Wood v Odessa Waterworks Co, Eley v Positive Government Security Life Assurance Company), ‘outsider’ rights had been enforced under the S.33 contract.

Gregory agrees with Wedderburn in that the judge, Astbury J, misinterpreted the previous cases, by failing to take into account relevant consideration. Gregory further relies on Eley stating that “both Amphlett B, at first instance, and Lord Cairns, in the Court of Appeal….expressly stated that the article was binding as between the parties to the statutory contract” He contends that as Eley sued as a solicitor and not as a member, there was no conflict with Wedderburn’s proposition.

In contrast to Wedderburn and Gower opinion, Goldberg has sought to find a middle way, by providing the following explanation of the cases “a member has no right under [s.33] to have enforced a right or power bestowed by the… articles on a person otherwise than in his capacity as a member of the company, whether or not that person is in fact a member, unless the enforcement of that latter right or power is incidental to the enforcement of the members’ contractual right… to have any of the company’s affairs conducted by the particular organ of the company specified in the… articles.”

From this one can understand the importance of the question as to whether the company acted constitutionally or not. If the company has not acted constitutionally, the member can then enforce the statutory contract to ensure that the company does so, even by enforcing an ‘outsider’ right. Other than this no further enforcement of ‘outsider’ right is permissible.

In support of his argument, Goldberg cites Eley. Goldberg contends that the court held that the company was entitled to appoint solicitors under the articles, and that therefore, the appointment was exercised by the proper organ of the company. If Eley had enforced his rights this would have been contrary to the enforcement of member rights to have additional solicitors recruitment conducted by the proper organ of the company.

Prentice offers what can be described as an extended version of Goldberg’s analysis in that he agrees with Goldberg, but states that the question is not so much the proper organ of the company, but whether the organ has the power to act, and whether it remains within those powers.

Prentice considers the case of Haynes v Bristol Plant Hire Ltd.where, a resolution was passed at the time when a director has been wrongly excluded. The director was also a shareholder, therefore he had the right to seek that the resolution was invalid. Prentice contends that the company could only function properly through a properly constituted board, and where the company acted outside of this power, the shareholders could sue.

It is Prentice’s conclusion that ‘a member has a right to make the company function within the limits of the powers granted by and in the manner authorised by its constitution”

However, although this ‘middle way’ is an explanation of the cases, it is given post hoc. Drury notes, it is unlikely that the courts would have used this formulation in deciding the cases, otherwise presumably the judges would have stated this to be the case.

Drury further criticizes Prentice on the ground that, with reference again to Eley, that it does not appear that Prentice sees the case as one in which it was in the company’s power to appoint a specific solicitor. Drury contends that this is inconsistent with Prentice’s proposition that a member only has rights in so far as the articles restrict or relate to the power of the company to function.

Drury offers yet another explanation, based on what he calls the ‘relational approach’. He argues that the statutory contract reflects a long – term relationship between the company and its members. He then contends that the right of a shareholder to enforce a term of the contract should be considered within the context of that long-term relationship and balanced with the rights of the other shareholders.

According to Drury, the consequence of this approach is that cases can be explained on the basis of the wishes of the majority of the members. To illustrate his point Drury uses the case of Browne v La Trinidad in which the articles provided that the agreement with the director was incorporated, and that directors could be removed by special resolution, therefore, showing that there was an inconsistency in the articles. Drury contends that the court examined the wishes of the majority of members, as has been distributed by the special resolution removing the director.

However, Drury does accept that this theory does not fully explain the Hinkman’s case, where he notes that the wishes of the majority would have to be ‘presumed’. Drury’s argument appears to further suffer from the same weakness as the one he states against Goldberg and Prentice, specifically that the judges do not appear to have had the same “relational approach” as he had in mind at the time of deciding the cases.

Finally, Gregory has the view that the two lines of cases are irreconcilable, and it has been suggested by some that this opinion is the closest to the ‘truth’ of the matter.


In conclusion, the contract between the company and the members, formed by the articles, is an unusual one, in particular regarding the enforcement of rights which belong to parties outside of that contract. There is a good range of cases which shows an inconsistency arising as to whether these outsider rights are enforceable and if so on what basis. Attempts have been made, both judicially and academically, to reconcile the inconsistency.

There are extreme views, from strictly following the approach that outsider are never enforceable to the liberal approach which suggests that they can be enforced in the capacity of a member. However, there are other approaches which suggest that outsider rights are sometimes enforceable depending on the circumstances.

Ultimately, there is good reason that there is a range of opinion as the cases are flimsy and not reconcilable, and will continue to be so until there is further judicial consideration in the Court of Appeal, or House of Lords, where the controversy of the S.33 contract will be settled once and for all.

This question concerns the discussion of the legal effect of articles in terms of contract between the members of the companies under the wordings of section 33 of Company Act 2006.

Under Company Act (CA) 2006, s 15, the consequence of incorporation is the separate legal personality which the company acquires. Therefore, the company has a separate legal entity which register itself under this provision i.e. a body corporate is created and as an association of its members and a person separate from its members, therefore  a company has dual nature.

S 33 of CA 2006, for the first time has given the status of separate person regarding contractual analysis and also introduced the idea that members can make a contractual relationship with the company. Section 33 of CA 2006 provides that ‘‘the provisions of the company’s constitution bind the  company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.’’

It appears from the wording of the statute that by virtue of section 33 CA 2006, the provisions related to membership are of contractual nature. Therefore, the effect of s 33 CA 2006 is that an article of association which is contractual has only effect on the articles which is related with the membership and constitution of the company. In Beattie and Beattie, Greene MR stated that ‘‘The contractual force given to the articles of association by the section is limited to such provisions of the articles as apply to the relationship of the members in their capacity as members.’’

It is to be noted that the contract formed under articles of association is different from the usual contract of sale of goods and but the thing is under the contract of the articles there are rules which governs the decision making in the company.

Therefore, the question arises whether the outsiders have given the same right as members of the company. Outsider rights are called non-membership rights as opposed to insider rights which mean membership rights. It is to be noted that the outsider right is not contractual in nature by virtue of section 33 of CA 2006;

By virtue of section 33 CA 2006 if there is any contract contained in the articles of association then the position is that the contract can be enforced by the company against member of the company and a member can also enforce the contract against the company. Moreover, Section 33 of Ca 2006 gives an individual member to enforce the contract against another member of the company. Providing in each of these cases they are enforcing the contract in respect of membership rights.

Therefore, by virtue of section 33 of Company Act 2006 there are several rules which the parties must observe for the contractual relationship under the company and they are-

  1. By virtue of the contractual effect given to the constitution by CA 2006 s 33, any member has the right to enforce observance of the terms of the constitution; Wood v Odessa Waterworks Co.
  2. An individual member can recover for his individual loss by taking a personal action, even though the conduct is amount to a wrong done to a company itself;
  3. If an individual is not a member of the company then the articles do not constitute a contract between the company and that person; Eley v positive Government Security life Assurance Co (1876)
  4. By virtue of s33, the members can enforce the contract in their capacity as members, the section 33 can bind the company itself and also the members of the company under the article, but no individual (such as a director) within their special or personal capacity can enforce the contract; Hickman v Kent or Romney Marsh Sheepbreeders Association

Each of these aspects of section 33 of Ca 2006 will be discussed in turn.

It is to be noted that section 33 of CA 2006 was enacted to clarify section 14 of CA 1985 and Section 14 of the CA 1985 was subject to a huge criticism for its lack of clarity. With a view to clarify the confusion the Law Commission (Law Commission Report No 426) reviewed the Scope of the provision and the Law Commission suggested that s14 should be reviewed as a type of contract which will be protect the rights of the share-holders. Section 33 CA 2006 continues the ‘membership’ contract but it is as yet unclear how far s 33 will be applied. However, to make it more specific the law commission did also recommend that there should be some form of dispute resolution enclosed in the article.

S.14 of the Companies Act 1985 constitutes a contract between the members inter se as it states that the memorandum and articles represent a contract between the company to its members and vice versa.  It is a special type of contract as it can be varied without the consent of all the parties to it by special resolution and also binds future members. As a result when new members join the company by buying shares, the s14 contract was automatically bind them to observe the pre-existing constitution. This removes the possibility of renegotiating the rules every time a new shareholder arrives.

It appears that the section 33 of CA 2006 is equivalent to its predecessor provision section 14 of CA 1985, and the only difference is that the effect of the section 33 CA 2006 differs to the extent that the memorandum is no longer a part of the company’s constitution. In Bratton Seymour Service Co Ltd v Ox borough, Steyn LJ held that ‘by virtue of s 14 (now CA 2006, s 33) upon registration, the articles of association become a contract between a company and members. However, it is a statutory contract of special nature with its own distinctive features.’

The wording of s33 CA 2006 has been changed from its predecessor (s 14 CA 1985) to reproduce the fact that the constitution is binding on the company and the members to the same extent. This was not clear entirely from the wording of s 14 CA 1985, although s 14 CA 1985 was interpreted in this way. The relevant case can be Wood v Odessa Waterworks where the articles empowered the directors with the sanction of a general meeting to declare a dividend to be paid to shareholders. The company proposed to pay no dividend but instead to give the shareholders debenture-bonds by passing an ordinary resolution. Wood a shareholder sought an injunction to restrain the company from acting on the resolution. It was held that the proposal was inconsistent with the articles and the injunction was accordingly granted.

The law under section 33 of Ca 2006 does not recognize the enforcement of outsider rights against the company, not even in the situation where they may be rights in respect of member but not membership rights as such. Therefore, it can be said that articles however do not constitute a contract between the company and someone who is not a member. The point is, if someone wants to enforce any article he must sought it as a member. In Eley v Positive Government Security Life Assurance Co Ltd an article of the company provided that Mr. Eley to be the solicitor of the company. Mr Eley who was a shareholder sought to enforce the term of the articles. However the CA held that there was no contract between the company and Mr Eley as he was not entitled to be the solicitor of the company as member. Therefore, the rule that a person cannot enforce the contract in a capacity of his outsider rights was established in this case. The definition of outsider rights within its wider scope includes remuneration rights of directors contained in the articles. A list cases are available on this point another case is that of Re New British Iron Co, ex p Beckwith it was held in this case that there was no contract between the director and the company by virtue of article but since they had accepted office on the basis of the article, the terms were incorporated in their contract of service as an implied terms. In Swabey v Port Darwin Gold Mining Co the court was given the similar decision and held that in the normal way of any article the implied term was subject to prospective alteration.

Therefore, another difficulty has been added to the s 33 debate by the fact that while there is deemed to be a binding contract between the members and the company, that contract only binds the members in their capacity as members. Where outsider rights are at issue the s 33 contract does not apply. For example, in Eley v positive Government Security life Assurance Co (1876) the court found that Mr. Elley could not rely on breach of that clause as there was no contractual relation between the member as ‘solicitor’ and the company.

There are some features of the s 33 which are more controversial. The ability of a shareholder to enforce the contract which is contained in the articles is uncertain. The traditional view is that a shareholder can enforce the articles insofar as the relevant articles create a ‘membership’ right, that is, a right attaching to each and every share, which related to the holding of shares. This view also derives from the decision of Astbury J in Hickman v Kent or Romney Marsh Sheepbreeder’s Association (1915), where he stated,

“this much is clear , first, that no article can constitute a contract between the company and a third person; secondly, that no right merely purporting to be given by an article to a person, whether a member or not, in a capacity other than that of a member, as for instance, as solicitor, promoter, director, can be enforced against the company; and, thirdly, that articles regulating the rights and obligations of the members generally as such do create rights and obligations between them and the company respectively.”

There are two difficulties with this decision. First the precise nature of a ‘membership right’ is indistinct. And second and more fundamental, objection to Astbury J’s view is that the section does not differentiate between membership and non-membership rights and powerful argument have been raised against this interpretation of the section33 contract.

Other unusual features of the s 33 contract are that the ‘contract’ does not provide each party with a list of contractual duties, it is potentially infinite and it is not subject to rescission for misrepresentation.

More recently in Globalink Telecommunication Ltd v Wilmbury Ltd the court considered the validity of a director’s indemnity provision that had been placed in the company’s articles. The court found that such a provision would not be binding.  The reason is that the articles do not constitute a contract between the company and its officers. It will only bind the Company if the provision is contained in a separate contract between the company and the officer.

Therefore, it is evident in the light of the judgment of above cases that within the scope of the s 33 of CA 2006 there is no recognition of outsiders rights. 

Professor Gower (Principle of Modern Company law) also opined that s 33 of the CA 2006 can only be utilized qua member:

The decisions have constantly confirmed that the section confers contractual effect on a provision in the articles only in so far as it affords rights or imposes obligations on a member qua member.

A contrary view is put forward in an article in the Cambridge law Journal by Lord Wedderburn in ‘Shareholders’ rights and the rule in Foss v Harbottle. In this article, Lord Wedderburn argues that the decision in Salmon v quin & Axtens Ltd where the consent of both directors was needed for certain decisions according to the article of the association of the company. In this case Mr. Salmon, who was the director and member of the company, dissented from a decision. Afterwards when the general meeting passed a resolution authorizing the decision, Mr Salmon naturally sued as a member to enforce the article. The House of Lords accepted the personal right and the ratio was permitting a member to obtain an injunction restraining the company from concluding agreements entered into in breach of the company’s article, showed that the member was able to enforce his rights as a director.

The important question will be what does s 33 CA 2006 mean? S 33(1) CA 2006 states, the provisions of a company s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.

It was held in Hickman v Kent or Romney Marsh Sheepbreeders Association that, the enforceability of an article of association which allowed for arbitration proceedings where there was a dispute between members and the company at issue. The article was therefore contractually binding between the members and the company. The contract is bilateral and binds both the company and the members; it is also binding between the members; Rayfield v Hands (1960). However, for a considerable period before Hickman case the confusion and uncertainty was there regarding the scope and the effect of section 33 of Company Act 2006. They were concerned basically with the question as to who are parties to the statutory contract- whether the member and the company or whether the members alone. Also the question was whether members deemed to have covenanted with each other or with the company or both. Another question arises whether the member can sue directly under the contract or company has to take an action on behalf of members.

However, the controversy has been resolved by the judgment of Hickman that company is party to the contract by virtue of its own memorandum and articles which has also resolved by the wordings of s 33 of CA 2006 and the provision explicitly mentioned that both the members and the company can enforce the contract within the company against one another directly.

It is to be noted that although the judgment of the Hick resolved some of the previous controversy but also has led to a new problem. First is that there is no solution to reconcile the qua member rule. Secondly, section 33 cannot be relied to enforce the rights of a non-member.

Although section 33 was enacted to remove the confusion concerned with the scope of its predecessor provision section 14 of CA 1985 but it seems likely that confusion remains with the section 33 CA 2006 as to whether the contract is enforceable between members. Barc and Bowen(1988) argue that unless the company is a quasi-partnership a member cannot enforce the articles of association of a company directly against another member. Therefore, the company itself is the proper claimant in such situation.

A quasi-partnership company formed on the basis that certain members will become directors will get class rights and will be regarded as being concerned with membership rights; Rayfield v Hands [1960].

In Re Richmond gate Property Co Ltd[1965] 1 WLR 335 W, having  appointed, a member of the company worked in the company as a managing director. The articles contained a provision which states that ‘the board could fix the remuneration as they might think fit.’ However, before any remuneration was fixed, the company went into voluntary liquidation and the claimant asked the remuneration for his service based on the claim either he has a claim under contract or in quasi-contract (quantum meruit). The court held that although he was member of the company under the contract but is not entitle to get remuneration as the remuneration was not determined and also was not entitle to get the remuneration as quasi-contract was excluded by the valid contract. Whereas, in Crave-Ellis v Canons Ltd [1936] 2 KB 403, the claimant was given the remuneration under quasi contract and the reason behind the decision was that his contract of employment was a nullity. With regard to this situation However Davies (2008) considers that a ‘direct action between the shareholders concerned is here possible; and for the law to insist on action through the company would merely be to promote multiplicity of actions and involve the company in unnecessary litigation’.

In the light of the above discussion it seems likely that there is considerable confusion as to the applicability of the section 33 of Company Act 2006 and that is why the CLRSG in their final report recommended’ the clarification of the nature of the company’s constitution including increased certainly as to what rights are enjoyed and may be pursued by members personally under the constitution’. They recommended the solution with a view to allow all rights in the constitution to be enforced against the company and the other members unless the constitution provides otherwise.

The critics opined that although s 33 of the Company Act 2006 was enacted to cure  the uncertainties about enforceability between members and members and company which the section 33 CA 2006 has given the  solution but the confusion is not cured regarding its central contract of the company. As a result the  precise application of s 33 of Company Act 2006 and s 14 of Company act 1985 remains the same. Lord Wedderburn, by considering the unfortunate effect of section 33 of company Act 2006 tabled an amendment to s33 during the Grand Committee stage of the Bill with a view to clarify the relationship between the company and members. However, the Government has rejected the amendment and stated that ‘notwithstanding the valuable work of the Company law Review in this area, we have yet to be convicted that there is anything better and clearer.’ Therefore, the consequence of this rejection is that the scope of section 33 of Company Act 2006 governs the relationship between the members exactly the same way as its predecessor s14 CA 1985 did. The CLRSG description of s 14 CA 1985 as ‘the outmoded and inadequate’ is also applicable for the section 33 of C A 2006.

Therefore, confusion remains with the question of who is entitled to sue under s 33 to enforce the contract within the company. Members may be able to enforce it against each other, and further a more complex situation occurs where the member wish to enforce it against the company. The basic point should be whether the complained wrong is a wrong done to the company or to the member. We know that a company runs with its constitutional organs. The decisions are made by the Board of Directors or in a general meeting. This is the reason that an individual shareholder is not empowered to bring proceedings for a wrong done to the company. This rule is described in Foss v Harbottle (1843). But it can inevitably create the situation where minority shareholders can be subject to fraud through the abuse of majority. There are some common law and statutory provision to check the crisis and manage the minority complaints. The situation with regard to who can sue to enforce the s 33 contract is similar. A majority of the members may vote to do so and the minority shareholders may wish to sue to enforce depending on how the breach of the constitution is professed.

Therefore, only a company can sue if the wrong in question is wrong to the company itself. On the other hand if it is a personal right of the shareholder then it is the individuals who can sue to enforce. In Mozley v Alston 91847) the wrong was treated against the company and therefore the company was the only one who can sue. Similar decision was made in the case MacDougall v Gardiner (1875) where individual shareholders right to a poll was refused.

The precise scope of the s 33 contract is still far from clear ;these difficulties may be explained by the fact that the wording of s 33 CA 2006 derives from provisions related to unincorporated joint-stock companies which are legally and entirely different kind of being. It can be conclude that a combination of Ashbury J’s interpretation of s 33 and courts application of s 21 CA 2006 significantly diminish the rights of an individual shareholder.

As Company Act 2006, s33 substantially re-enacts its predecessor, Company Act 1985, s 14, there is need to improve the applicability of the s33 of CA 2006. The Company law Steering Group having considered the consequence of s 33 of CA 2006 said in paras that 4.72-4.99 ‘the present situation does nothing to resolve the critical question of what rights are personal to the shareholder. Regarding the issue of rights in the articles they recommended a number of reforms, particularly with regard to the controversial issue of “outsider rights”. The CLRSG finally cancelled most of recommended reforms except one catch- all solution in which they recommended that unless the contrary was provided, all the articles would be enforceable by the members against the company and each other. Basically they recommend that personal rights should be removed completely. The CLRSG recommend for the general enforcement and the allowance of exclusionary articles. Unfortunately, the government did not adopted any of the recommendation and observe the current position under section 33 of CA 2006.

To conclude, it is evident from the above discussion that the application and the scope of the Section 33 of CA 2006 to some extent resolved the previous controversy concerned with its predecessor section 14 of CA 1985. But the precise application of the new provision is not free from criticism. The government has also rejected the recommendation provided by the CLRSG which has the potential improvement if adopted by the government. Therefore, the consequence is that the current position under s33 of Company Act 2006 remains unchanged comparing to the previous law under section 14 of CA 1985.



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  1. Cases and Materials in Company law, by Len Sealy and Sarah Worthington, 8th edition