What are Articles of Association?
What are Articles of Association?
Articles of Association are written rules about running a company agreed by the shareholders or guarantors, directors and the company secretary. They are required under the Companies Act 2006 and become a public document when a company is registered with Companies House.
What’s the difference between Memorandum and Articles of Association?
A Memorandum of Association is a legal statement signed by all initial shareholders or guarantors agreeing to form a company. Again, it is required under the Companies Act 2006.
Why are Articles of Association important and why do you need them?
Articles of Association cover a number of elements including company purpose, its administrative structure, powers and duties of company directors and the awarding of dividends.
They regulate how a company is managed and are legally binding. They help ensure any decisions are compliant and that a company is being run in the correct way.
Model Articles of Association
Model Articles of Association are the standard default articles a company can use. They are prescribed by the Companies Act 2006.
There are different Model Articles of Association for:
- Private companies limited by shares.
- Private companies limited by guarantee.
- Public companies.
Details of what each version covers can be found here.
Who is bound by the Articles of Association?
A company and its directors and shareholders are bound by law to comply with its own Articles of Association.
Many companies will use Model Articles of Association provided by the Companies Act 2006. Other companies will choose to engage lawyers to draw up bespoke Articles of Association and to ensure the Articles meet the necessary statutory requirements.
By law, private limited companies must have a minimum of one director. Public companies must have a minimum of two directors.
Most company Articles allow decision-making by a sole director but it is advisable to have another director appointed. The appointment of a second director can be agreed at a general board meeting.
A quorum – that is the minimum number of directors who must be present at a meeting to make it valid – is usually specified in the Articles. In the Model Articles for a private company, it is two directors unless there is only one director of the company.
What are the legal effects of the Articles of Association?
The Articles are essential documents that set out a company’s rules. They also set out how shares can be transferred and other fiduciary duties. The Articles are a binding legal document between a company’s shareholders and directors.
Where should the Memorandum and Articles of Association be stored?
Both these articles are established as part of a company’s formation process. They are required to be registered with Companies House and can be viewed by the public.
Companies should keep copies of their Articles at their registered address or a Single Alternative Inspection Location (SAIL) address which some companies choose to use for convenience as an alternative to a registered office.
Can the Articles of Association be changed?
To reflect the changing needs of a business, it is possible to amend a company’s Articles of Association at any point after incorporation.
A company needs the agreement from its shareholders before changing its Articles.
This can include changes to your company’s ‘objects’ – what your company does as a business.
Normally, existing Articles can be amended by a special resolution (>75% majority) of the shareholders at a general meeting. However, some provisions of the Articles may be entrenched, and require an even higher level of shareholder approval.
How to send the Memorandum and Articles of Association to Companies House?
If you have registered your company online you have to adopt the model articles by submitting the memorandum online.
If your company is registered by paper application, you can choose either the model or bespoke articles. Both the memorandum and bespoke articles must be submitted by post.
How to get a copy of the Memorandum and Articles of Association?
You can download a company’s Memorandum and Articles of Association from the Companies House website.
This factsheet provides general guidance on the Memorandum and Articles of Association of a company. It is not intended to be a substitute for legal advice. If you have any specific questions about the Articles of Association of your company, you should consult with a qualified lawyer.
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