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Which of the following are NOT bound to one another by the articles of association?
A. The company to third parties
B. Members to the company
C. The company to members
D. The company to directorsAnd what do you think the answer is?
Where is this from? It’s a tricky one because there are 2 possible answers in my mind – and 2 that are clearly not possible
This is from a revision kit. The correct answer is A.The company to third parties.
but the answer I guessed was D.The company to directors. Clueless 🙁
Please help me with thisThe obvious one is (a) but I’m not happy about (d)
There is a statutory duty for directors to act within their powers and, that being so, where their powers are established by the constitution, the they are bound by that constitution (the articles)
It is a long-established principle that the articles of association do NOT bind the company to outsiders / third parties
And, until the most recent Companies Act when the statutory duties of directors were written into law, directors were not bound IN THEIR CAPACITY AS DIRECTORS (they were bound in their capacity as members – see the case Baillie v Baillie)
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