The company constitution serves as a contractual agreement between the company and its members, as well as among the members themselves.
Under Section 39(1) of the Companies Act (CA), each member has a personal right to take legal action to enforce a provision of the constitution or to prevent its violation.
If a breach of the constitution is established by the court, it has the power to order compliance with the constitution or to award compensation for the losses suffered by the affected parties.
It is important to note that Section 39(1) specifically applies to rights that pertain to a member in their capacity as a member of the company, rather than in their personal capacity.
For instance, a member can seek to enforce their right to vote at an Annual General Meeting if it is being wrongfully denied. This right is granted to them as a member of the company.
However, an action brought by a member that does not directly affect their role as a member is less likely to succeed.
For example, even if the constitution grants a company director a veto right, they may not succeed in obtaining a court order for compliance with that provision. This is because the right affects them in their capacity as a director, rather than as a member of the company.
Furthermore, in a private company limited by shares, each member is required to make a declaration to the Accounting and Corporate Regulatory Authority (ACRA) regarding their intention to acquire shares in the company and the number of shares they intend to acquire.
The company constitution must be signed by all members and kept at the company’s registered office.
Amending the Company Constitution: The process of amending the company constitution in Singapore differs depending on whether the amendment involves changes to the company’s objects.
Any amendment that modifies the language of the objects is considered an alteration to the company’s objects. For example, changing from “brewing beer” to “operating a café.”
The following changes are also considered modifications to the language of the objects:
However, renumbering the object’s clauses without altering the language of the objects itself is not considered a change to the company’s objects. Nevertheless, this type of change still constitutes an amendment to the constitution and must comply with the prescribed procedure.
The company constitution establishes contractual obligations between the company and its members, and among the members themselves. Members have the right to enforce provisions of the constitution, but such enforcement is limited to matters that affect them in their capacity as members. Amendments to the constitution require adherence to specific procedures, depending on whether changes are made to the company’s objects.