All limited companies registered in the UK must have articles of association.
This constitutional document, which is adopted during the incorporation process, defines the rules and regulations that the company is legally required to follow at all times.
You can choose default Model articles provided by Companies House, or you can create a tailor-made version to suit the needs of your company; however, the vast majority of companies have no need to create their own.
If you are thinking about forming a company, don’t worry about supplying your own articles as they are provided by your company formation agent as part of their service.
What is the purpose of articles of association?
In very simple terms, articles of association specify the rules that company officers (directors and secretaries) must implement when running the business.
They cover a range of topics, including:
- the rights of company members (shareholders or guarantors)
- limited liability of members
- the duties and powers of company directors
- the procedures for appointing and removing company officers
- how decisions are made
- the procedures for issuing and transferring company shares
- how to approve and issue dividends
- and the requirements for board meetings and general meetings
It is important that all company officers and members are familiar with the contents of the articles of association. Companies should keep a copy at their registered office or SAIL address.
You can also view a company’s articles of association (as well as other incorporation documents and company details) online via Companies House Service. If they are not available to view, it means that the company is using the Model articles of association.
What are ‘Model’ articles of association?
Model articles of association are standard (default) sets of articles that most companies use. Unless you alter these articles or create your own version, your company will adopt the relevant Model articles in their entirety during the incorporation process.
Although limited in scope, Model articles provide a good base, particularly for small companies with only one or two directors and shareholders.
The Companies Act 2006 prescribes different versions of Model articles for private companies limited by shares, private companies limited by guarantee, and public companies limited by shares (PLCs). You can view and download Model articles online.
Can I change my articles of association?
In order to pass a special resolution, a majority of at least 75% of shareholders’ votes must be cast in support of the motion.
Articles of association should not be confused with the memorandum of association
The memorandum of association is another constitutional document that all UK limited companies must have.
Created during the company formation process, the memorandum lists the names of the initial subscribers (first members) and certifies that each individual agrees to:
- form the company under the Companies Act 2006
- become a member of that company
- take at least one share (limited by shares companies only)
The memorandum of association is a matter of public record and can be viewed online via Companies House Service. Additionally, it is a historical document, which means it cannot be amended after incorporation or removed from the Companies Register.
And there you have it.
We have discussed the question – does a company need articles of association? And the answer is a most definite yes, as they are the rules according to which a company must be run and administered.
Together with the memorandum of association, they form the company’s constitution.
1st Formations provide bespoke articles of association with our incorporation packages which are very similar to Model articles, although they are slightly more comprehensive with regard to best practice and company management.