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What are the Articles of Association?

02 April 2020

The model articles of association establish a company’s constitution, detailing the internal rules and regulations that must be followed by the company’s officers. The document is a legal requirement of all companies in the UK.

Three versions of the ‘model articles’ are available for the three different limited company structures in the UK:

– Private companies limited by shares

– Private companies limited by guarantee

– Public limited companies (PLC)

Model articles of association provide an ideal foundation and are most appropriate to small companies where there is limited risk of disputes between shareholders and directors However, as the business changes it is possible to create, alter, and remove provisions in the articles.

What is included in the model articles of association?

The provisions included in the model articles of association broadly cover five essential areas (where applicable):

– Liability of members – Financial liability of shareholders or guarantors is
limited to the fixed nominal value of their shares or guarantees

– Directors – Powers and responsibilities, procedures for decision making,
appointment and termination, remuneration and expenses

– Shares and distributions – Paying for shares, rights attached to shares,
allotment and transfers of shares, payment of dividends and other
distributions

– Decision-making by members – Organisation of general meetings, voting at
general meetings, additional decision-making options

– Administrative arrangements – Permitted forms of company
communication, company seal, inspection of company records, directors’
indemnity and insurance

When should I adopt bespoke articles?

Whilst a great starting point for many new companies, it may be necessary to adopt bespoke articles before or after incorporation when:

– Issuing multiple share classes or any class of share other than Ordinary

– Providing the option to allot shares as unpaid, partly paid, or fully paid

– There will be alternate directors

– Restricting directors’ powers

– Granting additional powers to directors

– Including restrictions on the transfer of shares

– Requiring a private limited company to hold annual general meetings

– Giving notices and holding meetings by electronic means

– Removing conflict provisions that prevent directors from voting if they
have a conflict of interest

Changing the model articles

Members can agree to change the articles of association by passing a special resolution at a general meeting or in writing. This requires a majority vote of at least 75% of shareholder votes.

Companies House must receive a copy of the new articles as well as the resolution within 15 days of any change being agreed. If a company is reverting back to the model articles only a copy of the resolution must be delivered to Companies House.

Where a bespoke provision is inconsistent with the Companies Act 2006, the model articles will override the offending provisions.

Where do I get articles of association for my company?

Our experienced staff will be able to advise you on the most appropriate articles to adopt for your company. When you form a company through The Company Shop you will receive a digital copy of your chosen articles in addition to a physical copy. Companies House approve each incorporation, a process which usually takes less than 24 hours.

"We have worked with Des and the team at The Company Shop for 10 Years ...

Brendan Corr, Corr & Corr Chartered Accountants

 
 

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