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ACCA Applied Skills · Corporate and Business Law (Global) · The formation and constitution of a company

Karimov Ltd was incorporated without registering any articles of its own. In a jurisdiction that provides model articles, what is the legal position?

The model articles apply automatically as the company's default articles. The company can trade normally and still has a constitution; members may later replace or adapt the model articles by passing a special resolution.

  1. AThe company cannot trade until its members agree bespoke articles in general meeting
  2. BThe model articles apply by default to the companyCorrect
  3. CThe company is governed by the common law only and has no constitution

Explanation

Where a company registers no articles, the model articles prescribed by the jurisdiction apply by default. There is no bar on trading and the company still has a constitution. Where articles are registered but silent on a point, model articles also fill gaps in some systems, but the key rule is default application.

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