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, which are available from Companies House, or you can create a tailor-made version to suit the needs of your company.
What is the purpose of the articles of association?
In very simple terms, the articles of association specifies the rules that company officers (directors and secretaries) must implement when running the business. It covers a range of topics, including:
- rights of company members (shareholders or guarantors)
- limited liability of members
- the duties and powers of company directors
- procedures for appointing and removing company officers
- how decisions are made
- procedures for issuing and transferring company shares
- how to approve and issue dividends
- 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. Most company formation agents include Model articles with their incorporation packages. At 1st Formations, clients also have the option to register up a company with altered or bespoke articles, which is ideal if you want to issue multiple share classes.
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.
Do I need a 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 agree 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 of removed from the Companies Register.
Can I change my articles of association?
You can change the articles of association of your company at any point, provided a special resolution of the members is passed in favour of the proposed amendments. In order to pass a special resolution, a majority of 75% of shareholders’ votes must be cast in support of the motion.