As published on our Talking Finance blog yesterday, a company is governed by its constitution, known as the company’s ‘articles of association’ or, simply, ‘articles’. The articles may include rules on what the company can and cannot do, for example, in relation to borrowing, the granting of security and the giving of guarantees.

Although legislation seeks to protect third parties dealing with a company in good faith against any limitations on that company’s powers contained within its articles, a prudent lender should check a company has the legal capacity to enter into the proposed transaction.

How can a company’s powers be restricted? Click here to read the full post

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.