Where the Court makes an order under section 152(2)(d) altering or adding to the company’s constitution, section 153 of the Companies Act 1997 governs what follows.
Section 153(1) — the alteration is entrenched
Where the Court makes an order under section 152 altering or adding to the constitution, the constitution, to the extent that it has been altered or added to by the Court, can only be altered or added to again —
(a) in accordance with the terms of that order; or
(b) with the leave of the Court.
Ordinarily a constitution may be altered by special resolution under section 33(2). Section 153(1) displaces that for the Court-made part.
Without it, the remedy would be hollow: a Court could insert a protection for a minority on Monday, and the 75 per cent majority could remove it on Tuesday. Section 153(1) makes the protection stick.
Note the words “to the extent that it has been altered or added to by the Court”. The rest of the constitution remains alterable in the ordinary way. Only the Court-made provisions are entrenched.
Section 153(2) — the alteration is a normal part of the constitution
Any alteration or addition made by an order under section 152 has the same effect as if it had been made by the shareholders pursuant to section 33, and the provisions of this Act shall apply to the constitution as altered or added to.
The Court-made clause is not a standing injunction; it is part of the constitution. So:
- it binds as a contract under section 32(1) — between the company and each shareholder, and between each shareholder;
- a director who acts, or agrees to the company acting, contrary to it breaches section 114;
- a shareholder, director, entitled person or the Registrar may seek an injunction under section 142 to restrain a contravention of it; and
- it becomes one of the documents to be produced under section 34 when a consolidated constitution is prepared, and forms part of the company records under section 164.
Under section 30(d), the constitution of a company includes a document “as altered under section 33 or varied by the Court under section 35” — and section 153(2) achieves the same result for a section 152 order.
Sections 153(3) and (4) — filing the order
Within one month of the making of an order under section 152 altering or adding to the constitution, the board shall ensure that a certified copy of the order and the constitution as altered or added to is submitted to the Registrar for registration.
Where the board fails to comply, every director commits an offence and is liable on conviction to the penalty in section 414(2).
Note who bears the obligation. Under section 35(2) — where the Court alters a constitution because the ordinary procedure is not practicable — the duty to file falls on the applicant, and the offence under section 35(3) is the applicant’s. Under section 153 the duty falls on the board and the offence on every director. That difference matters: a successful minority applicant under section 152 need not chase the filing itself.
Sections 35 and 153 compared
| s 35 — Court may alter constitution | ss 152(2)(d), 153 | |
|---|---|---|
| Trigger | Altering the constitution by the ordinary procedure is not practicable | Affairs conducted in a manner that is oppressive, unfairly discriminatory or unfairly prejudicial |
| Who may apply | A director or shareholder | A shareholder, former shareholder, or any other entitled person |
| Nature | Procedural rescue — deadlock, missing shareholders, unworkable clause | Substantive remedy for unfairness |
| Entrenched? | No express entrenchment | Yes — s 153(1): only per the order or with leave |
| Who files, within one month | The applicant — offence under s 35(3) | The board — offence by every director under s 153(4) |
| Other orders available | Such terms and conditions as the Court thinks fit | The full section 152(2) list — buy-out, compensation, receiver, liquidation, setting aside action |
Practical points
- Ask for the right clause. An applicant seeking a constitutional order should draft the proposed provision precisely — the Court is being asked to write it into a binding document.
- Consider what else is needed. A constitutional alteration is often paired with an order regulating the future conduct of the company’s affairs under section 152(2)(c), or rectification of the records under section 152(2)(f).
- Address the terms of future alteration. Section 153(1)(a) allows the order itself to specify how the clause may later be changed — for example, only with the consent of the protected shareholder. Ask for that if it matters.
- Watch the interest group consequences. If the alteration affects rights attached to a class, the ordinary consequences of section 98 and the section 99 buy-out right follow, because section 153(2) makes the alteration operate as if made under section 33.
- Diary the filing. One month, certified copies of both the order and the altered constitution — and the offence falls on every director.
- Consolidate afterwards. Where the constitution has accumulated amendments, use section 34 to produce a single document, certified by a director.
Sources
- Companies Act 1997 — ss 30, 32–35, 98, 99, 114, 142, 152, 153, 164, 414
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.