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A guide of the sections and the powers granted by such sections to companies.
Powers Granted to a Company Only If Provided for in the Articles of Association

The Memorandum and Articles of Association represent the constitution of the Company and, taken together, they form a statutory contract which binds the Company and its members.

The Memorandum of Association (the “Memorandum”) is the public- facing document which includes prescribed information of interest to external parties, while the Articles of Association (the “Articles”) govern the internal affairs of the Company.

The Articles is a very important document and must be carefully drafted. This document may be described as the internal regulations of the company governing its management and embodying the powers of the directors and officers of the company as well as the rights of the shareholders. Articles of Association generally prescribe the relation between shareholders and the Board of Directors, the relation among shareholders, and Directors themselves.

Articles of Association

The Articles run to more than 160 clauses. Initial clauses include provisions dis-applying any statutory presumptions in relation to the Articles and extensive Definitions and Interpretation provisions. The substantive clauses cover the topics outlined below:

• Share Capital:

The Articles specify the powers of the directors in respect of the disclosure of interests in shares by the underlying holder, and outline the sanctions (including removal of voting and dividend rights) applicable in the event of a failure to comply with a disclosure request.

The Companies Act provides that a person, including a company and other legal entities, that acquires any interest of 3% or more of any class of the Company’s shares comprised in the Company’s “relevant share capital” is required to notify the Company in writing of its interest within two business days following the day on which the obligation arises.

Relevant share capital, for these purposes, means the Company’s issued share capital carrying the right to vote in all circumstances at a general meeting. After the 3% level is exceeded, similar notifications must be made where the interest falls below the 3% level or otherwise in respect of increases or decreases of a whole percentage point.

The interest of a person in shares means any kind of interest in shares including interests in any shares:

• in which a spouse, or child or stepchild under the age of 18, is interested;

• in which a corporate body is interested, which includes interests held by other corporate bodies over which that corporate body has effective voting power, and either (a) that corporate body or its directors generally act in accordance with that person’s directions or instructions or (b) that person controls one-third or more of the voting power of that corporate body; or

• in which another party is interested and the person and that other party are parties to a “concert party” agreement. A concert party agreement is one which provides for one or more parties to acquire interests in shares of a particular company and imposes obligations or restrictions on any of the parties as to the use, retention or disposal of such interests acquired pursuant to such agreement, if any interest in our shares is in fact acquired by any of the parties pursuant to the agreement.

Certain non-material interests may be disregarded for the purposes of calculating the 3% threshold, but the obligation of disclosure will still apply where such interests exceed 10% or more of any class of the relevant share capital and to increases or decreases of a whole percentage point.

Failure to comply with the obligations described above, regarding disclosure of interests in shares, may result in criminal penalties.

• Powers of Directors

The Articles state that the directors shall manage the business and affairs of the Company and may exercise all the powers of the Company. They also outline specific powers in relation to the exercise of voting rights, the establishment of regional boards, the appointment of agents, the granting of powers of attorney, and the execution of cheques and related instruments by the Company.
The Articles include detailed provisions on the borrowing powers of directors. In general terms, they require that the aggregate principal amount outstanding does not exceed a certain sum without the prior sanction of the Company by ordinary resolution. Furthermore, the Articles include extensive definitions of what is deemed to be included and excluded from the definition of moneys borrowed.

• Power to Attach Rights

Subject to the provisions of the Act and to any rights attached to any existing shares, any share may be issued with, or have attached to it, such powers, designations, preferences and relative participating, optional.

• Power to Differentiate

The board may make arrangements on the allotment or, subject to the terms of the allotment, on the issue of shares for a difference between the allottees or holders in the amounts or times of payment of a call on their shares or both.

• Power of Sale

Where a power of sale is exercisable over a share the Company may, at the same time, also sell any additional share issued in right of such share or in right of such an additional share previously so issued shall have been satisfied in relation to the additional share.

• Power to Adjourn

The chairman or the holder or holders of shares representing the majority of the voting rights present at any general meeting shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting.

Without prejudice to any other power which he may have under the provisions of the Articles or at common law, the chairman may interrupt or adjourn a meeting from time to time and from place to place or for an indefinite period if he decides that it has become necessary to do so in order to:

(a) secure the proper and orderly conduct of the meeting;
(b) give all persons entitled to do so a reasonable opportunity of speaking and voting at the meeting; or
(c) ensure that the business of the meeting is properly disposed of.

• Exercise of Voting Powers

The board may exercise or cause to be exercised the voting powers conferred by shares in the capital of another company held or owned by the Company, or a power of appointment to be exercised by the Company, in any manner it thinks fit (including the exercise of the voting power or power of appointment in favour of the appointment of a director as an officer or employee of that company or in favour of the payment of remuneration to the officers or employees of that company).

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