Entrenched provisions of the Articles of Association

Normally, the Articles can be amended by a special resolution of the shareholders.

However, some provisions of the Articles have been entrenched.  The entrenched provisions of the Articles can only be amended if a special procedure is followed.  There are two procedures:

  • Level 1 Entrenchment (in accordance with Regulation 148 of the Articles) – the Regulations specified in Regulation 148 can only be amended if (i) the Board of Directors decide by a majority vote to amend any of the specified Regulations, and (ii) the shareholders by special resolution ratify the decision of the Board of Directors
  • Level 2 Entrenchment (in accordance with Regulation 149 of the Articles) – in order to ensure academic integrity, the Regulations specified in Regulation 149, that are of direct concern to the Academic Committee, can only be amended if (i) the Board of Directors decide by a majority vote to amend any of the specified Regulations, (ii) the Academic Committee by a majority vote ratifies the decision of the Board of Directors, and (iii) the shareholders by special resolution ratify the decision of the Board of Directors

The provisions of the Articles that have been entrenched include the following:

The incorporation and application of the ‘separation of powers’ principle:

  • Regulations 6 to 8 [Level 1 Entrenchment: see Regulation 148]

Provide for the incorporation of the principle of the ‘separation of powers’

  • Regulations 18 and 41 to 43 [Level 1 Entrenchment: see Regulation 148]

Provide that two elected staff representatives (excluding members of the Senior Management and Leadership Team (but not excluding the Secretary)), and two student representatives can attend directors’ meetings and participate in discussions

Before making any decision, the Chair shall invite representations to be made by the representatives attending the directors’ meeting, and the directors shall have due regard to such representations when making a decision

A directors’ meeting may be called by a director giving notice to the directors, the staff representatives and the student representatives

  • Regulations 6 to 7 and 44 to 50 [Level 1 Entrenchment: see Regulation 148]

Stipulate who cannot be appointed as a director, and require the directors to include a majority of independent non-executive directors

  • Regulations 8, 30 and 32 [Level 1 Entrenchment: see Regulation 148]

Stipulate who cannot act as Chair of a directors’ meeting or of a committee established by the directors

  • Regulation 51 [Level 1 Entrenchment: see Regulation 148]

Provides for the circumstances in which a director’s appointment shall be terminated

  • Regulation 52 [Level 2 Entrenchment: see Regulation 149]

Provides the Academic Committee with the power to pass an ‘advisory’ vote of no confidence in the Managing Director – the directors shall give due regard to such vote, provided a majority of the external academic advisors of the Academic Committee has voted in favour of it, the majority being determined by the number of external academic advisors  who have the right to attend and vote

  • Regulations 6 and 59 [Level 1 Entrenchment: see Regulation 148]

Stipulate who cannot be appointed as the Company Secretary

  • Regulations 6 and 96 [Level 1 Entrenchment: see Regulation 148]

Stipulate who cannot act as Chair of a shareholders’ meeting

The duty to adopt, amend and apply the Corporate and Academic Governance Framework

  • Regulations 139 and 140 [Level 2 Entrenchment: see Regulation 149]

Provide for the adoption and amendment of the Corporate and Academic Governance Framework

  • Regulations 141 and 142 [Level 1 Entrenchment: see Regulation 148]

Provide that the Corporate and Academic Governance Framework shall comply with the seven primary elements of the CUC’s ‘The Higher Education Code of Governance’, and the Office for Students Regulatory Framework, Notices and Advice.  The Corporate and Academic Governance Framework shall also embrace our own guiding principles set out in Regulation 142 of the Articles

  • Regulation 143 [Level 1 Entrenchment: see Regulation 148]

Provides that if there is a conflict between the Articles and the Corporate and Academic Governance Framework, the Articles take precedence

  • Regulation 145 [Level 2 Entrenchment: see Regulation 149]

Provide that the directors shall take into account the advice of the Academic Committee and the directors shall apply the Corporate and Academic Governance Framework

  • Regulation 146 [Level 1 Entrenchment: see Regulation 148]

Provides that, if the question arises, the Company Secretary shall determine how the directors should apply the Articles or the Corporate and Academic Governance Framework

  • Regulation 9 [Level 1 Entrenchment: see Regulation 148]

Provides that although the directors are unambiguously and collectively accountable for the company’s activities, this is expressly subject to Regulations 144-146

The explicit incorporation and application of the fourth primary element of the CUC ‘The Higher Education Code of Governance’[7] to ensure the Board of Directors receives an assurance from the Academic Committee that academic governance is effective

  • Regulation 144 [Level 2 Entrenchment: see Regulation 149]

Provides that the directors shall ensure that they receive assurance that academic governance is effective by working with the Academic Committee

Miscellaneous

  • Regulations 3 and 4 [Level 1 Entrenchment: see Regulation 148]

Set out the company’s objects and powers

  • Regulations 10 and 46 [Level 1 Entrenchment: see Regulation 148]

Provide that the directors shall appoint a Managing Director who shall also be appointed to the role of Academic Principal

The directors may delegate any of their powers to management (i.e. to the executive directors and other members of the Senior Management and Leadership Team (SMLT), excluding the Secretary of the SMLT)

  • Regulations 74, 79 and 80 [Level 1 Entrenchment: see Regulation 148]

Provide that shares may only be transferred or transmitted, subject to any prior approval that may be required from the Department for Education, the Office for Students, or any other UK government department or agency

  • Regulation 86 [Level 1 Entrenchment: see Regulation 148]

Provides that the shareholders declare dividends, but no dividend shall exceed the amount recommended by the directors; if the directors recommended a nil dividend, the shareholders cannot declare a dividend

  • Regulations 87 and 88 [Level 1 Entrenchment: see Regulation 148]

Provide that the directors may decide to capitalise any operating and retained surpluses of the company, and apply such capitalised surpluses to issue new shares that are fully paid, which will enable the directors to maintain a solvent balance sheet

  • Regulations 147 to 149 [Level 1 Entrenchment: see Regulation 148; and Level 2 Entrenchment – see Regulation 149]

Set out how the Articles can be amended, including the special procedures applicable to the amendment of the entrenched provisions:

Level 1 Entrenchment (in accordance with Regulation 148 of the Articles) – the Regulations specified in Regulation 148 can only be amended if (i) the Board of Directors decide by a majority vote to amend any of the specified Regulations, and (ii) the shareholders by special resolution ratify the decision of the Board of Directors

Level 2 Entrenchment (in accordance with Regulation 149 of the Articles) – in order to ensure academic integrity, the Regulations specified in Regulation 149, that are of direct concern to the Academic Committee, can only be amended if (i) the Board of Directors decide by a majority vote to amend any of the specified Regulations, (ii) the Academic Committee by a majority vote ratifies the decision of the Board of Directors, and (iii) the shareholders by special resolution ratify the decision of the Board of Directors.

[7] Committee of University Chairs, ‘The Higher Education Code of Governance’ (2014). See: www.universitychairs.ac.uk