Does a company need articles of association?

Hi there, Nicholas Campion here from 1st Formations, and welcome to another episode of Whiteboard Thursday, where we provide advice on a wide range of business and company matters.

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Today, I am going to discuss the articles of association, and specifically what their purpose is. I will also cover what is known as the ‘Model’ articles, and the memorandum of association.

So, does a company need articles of association? The answer is yes, 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.

Ok, let’s consider the purpose of articles of association.

In very simple terms, articles of association specify the rules that company officers, that is directors and secretaries, must implement when running the business.

They cover a range of topics, including:

• the rights of company members also known as the 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, and 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.

Which leads us nicely onto the next question – what are ‘Model’ articles of association?

Well, they are standard or default sets of articles that most companies use. Unless you alter them 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, also known as PLCs. You can view and download Model articles online at the GOV.UK website – and the link is included below.

It is also worth noting that 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 at least 75% of shareholders’ votes must be cast in support of the motion.

And finally, please be careful not to confuse articles of association 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, or first members, and certifies that each individual agrees to:

• form the company under the Companies Act 2006
• become a member of that company
• and take at least one share, if of course, it is a limited by shares company

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.

And there you have it.

Today I have discussed the question – does a company need articles of association? And the answer is absolutely 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.

It is worth mentioning that 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.

If you have any questions, please leave them in the comments section below, and in the meantime be sure to subscribe to our channel to get more advice on limited companies, reporting requirements, and tax obligations.

We’re always happy to hear from you, and we cannot wait to help. Until next time, cheerio.