s.33 of the CA 2006 protects the following: S.

33(1) CA 2006 states: 'The terms of a company's

constitution bind the company and its members to the same degree as if the company and each
member had entered into Covenants to follow those provisions.' This fairly peculiar statutory
contract was enacted in the nineteenth century to automatically bring shareholders and the
corporation together to uphold the corporation's constitution (Hiclaman v Kent or Romney Marsh
Sheep-Breeders' Association) (1915). It is an unusual contract in that it can be amended without the
approval of all parties (s.21 CA 2006); it also binds future members.

In Hickman v Kent or Romney Marsh Sheepbreeders' Association (1915), the court considered the
legality of an article of association that provided for arbitration in the event of a disagreement
between members and the business. As a result, the article acted as a contract between the
members and the corporation.

As a result, the article acted as a contract between the members and the corporation. However, the
articles do not create a contract between the business and a non-member. In Eley v Positive
Government Security Life Assurance Co Ltd, the company's articles stipulated that Mr. Eley serves as
its solicitor. Mr. Eley, a shareholder, attempted to have the articles of incorporation enforced.
However, the CA determined that no contract existed between the business and Mr. Eley since he
was ineligible to serve as the company's solicitor as a Member. An outsider to whom the articles
purport to provide rights in his capacity as such outsider, regardless of whether the relevant
Member is or becomes a member later, cannot sue the business on the basis of those articles,
regarding them as contracts between himself and the business, to enforce such rights.

However, the court is highly uneven in its application of the notion that e.14 cannot be used to
enforce the rights of third parties. Salmon v Quin and Axtens Ltd (1909) held that a company's
articles of association required that some decisions be made with the assent of both directors. Mr.
Salmon was the company's managing director and a shareholder, and he voted against the purchase
and leasing of property. The general meeting then adopted a resolution allowing the property's
acquisition and letting. Mr. Salmon brought suit as a member to enforce the article requiring the
managing director's assent to the transaction. The HL recognized a member's general personal right
to enforce the articles by permitting a member to obtain an injunction to halt a transaction that
violated the articles. As a result of the above discussion, it appears as though s33 CA 2006) has been
applied inconsistently, particularly with respect to the outsider right.

Apart from the doubt concerning the extent of section 14 (now section 33 CA 2006) described
before, there was also doubt regarding whether a minority shareholder may pursue his article rights.
Individual shareholders could not commence litigation against the firm under the majority rule
established in Foss v Harbottle (1843). To reconcile the Foss rule with section 33 of the CA 2006, a
member may enforce sections of the articles of association that conferred personal rights on the
Member qua Member. Thus, in Pender v Lushington (1877), a shareholder was able to litigate when
his or her personal right to vote was denied. Certain judges choose to abstain from interfering in a
corporation's internal operations. However, whenever a shareholder's personal rights are violated,
the articles are likely to be enforced.

Changes to the articles of association: Section 21 of the CA 2006 provides that a corporation may
amend its articles by special resolution if three-quarters of its members vote in favor of the
amendment. The court concluded in Punt v Symons & Co Ltd (1903) that a corporation could not
bargain itself out of the ability to amend its articles. This effectively indicates that a shareholder
agreement clause prohibiting the firm from amending its articles of incorporation will be
unenforceable. While doing so would constitute a violation of the contract, the corporation has the
right to amend its constitution. Additionally, the exercise of a member's vote may be conditional on
bona fides. Foster J refused to acknowledge the majority shareholder's authority to allow an
allocation of shares in Clemens v Clemens Bros Ltd (1976), where the purpose of the allotment was
to impair the minority shareholder claimant's voting power. Foster J reasoned that the majority
shareholder was 'not allowed to wield her vote in whatever manner she pleased.' He based his
conclusion on what he referred to as equitable considerations, and so the mala fides aspect of the
allotment prohibited its ratification (Greenhalgh v Arderne Cinemas Ltd (1951)).