The Role of a Company's Constitution in Corporate Governance

摘要

A company's constitution, or charter (as is known in the United States) is essentially a contractual document which theoretically allows members of the company to enter into binding commitments with the company and inter se, but could be derived from the Model Articles provided under companies legislations. From Tables A-F and its predecessors to the recent Model Articles for companies, the pro-forma constitution drafted for companies in the United Kingdom has always focused on how the organs of the company, namely the general meeting and the board of directors should conduct themselves. However, corporate governance now concerns not merely the traditional organs of the company, but also institutions such as independent directors, independent committees of the board and, generally, "the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders ...". These institutions are however developed in the realm of soft law, under a code of best practice. It is suggested in this article that some of the limitations of soft law in UK corporate governance may be overcome by allowing certain aspects of the Combined Code to form part of the enabling legal framework in company law, namely by providing for such aspects in the default Model Articles that may form a company's constitution. The article argues that this is particularly relevant to certain rights and duties, for example, of independent directors or independent committees. The discussion applies in particular to listed companies.