Guide to Changing Articles of Association: Upgrade Your Business

As a private limited company in the UK, your memorandum and articles of association are essential legal documents outlining how your business is run and managed. 

In this comprehensive guide, we will explore the process of changing articles of association for your UK business. Discover how to amend the articles, pass a resolution, and ensure compliance with Companies House regulations. By upgrading to a new or amended set of articles of association, you can improve your business’s governance structures and operational guidelines.

Key Takeaways:

• Articles of association are legal documents that outline how a private limited company is to be run and managed.
• Changing articles of association involves passing a special resolution through a general or written resolution, and complying with Companies House regulations.
• The process of drafting new or amending articles can be complex, and professional advice is recommended.
• Changes to the articles of association will only take effect once they have been registered by Companies House.
• Updating the articles of association is a necessary step for companies looking to adapt and grow.

Understanding Articles of Association and Their Importance

Before a private limited company can delve into the process of changing articles of association, it is crucial to understand what these articles are and why they are essential. Articles of association are legal documents that outline how a private limited company is to be run and managed. In conjunction with the company’s memorandum of association, the articles provide guidelines for the company directors and shareholders on various aspects of the business.

The articles of association cover the rules and regulations concerning the company’s internal management and decision-making process. They specify the rights and responsibilities of the company director, secretary, and shareholders. The articles also state the procedures for issuing and transferring shares and outline the processes for convening and conducting general meetings.

Private limited companies must ensure that their articles of association comply with the requirements set out in the Companies Act 2006. These articles are critical for the company’s efficient and effective operation, ensuring that everyone understands how the company is governed and managed.

Updating these articles is vital if the company wants to reflect any changes in its operations. Any proposed changes must be in line with the memorandum and articles of association, and they are subject to the approval of the company’s shareholders.

Reasons for Changing Articles of Association

Amending the articles of association is an essential process for a company that wishes to accommodate proposed changes in its structure or operations. The proposed changes should align with the company’s objectives and values. The articles of association provide for the internal regulation of the company. These provide for the company’s management, the rights and duties of its members, shareholders, and directors. Changes to the articles may be necessary to align them with best practices, comply with changes in the law, or update them to suit the evolving needs of the business. Seek the advice of corporate lawyers who are familiar with laws surrounding changing articles of association.

In essence, the articles of association must reflect how a company is run and managed. Therefore, if a company is changing how it functions, it is essential to change the articles of association to reflect these changes properly. The company may also need to update its articles of association if it is planning on raising funds or going through a merger or acquisition. By amending the articles of association, a company can better reflect its current and future operations, better positioning it for growth and success.

Amending the articles of association may sound daunting, but it is not a complicated process. In fact, amending the articles of association is relatively simple and can be done regularly to ensure that the company’s governing document remains up to date. It is important, however, to ensure that the regulatory requirements are met before making any changes to the articles of association.

The Process of Changing Articles of Association

To change the articles of association, a special resolution must be passed either at a general meeting or through a written resolution. The proposed changes should be clearly outlined, and a copy of the resolution must be sent to Companies House within 15 days.

It’s important to note that until the amended articles are registered, the existing articles will remain in effect.

A written resolution is a quicker and more convenient way of amending the articles, as it can be done without holding a meeting. This method requires a written copy of the resolution signed by all shareholders entitled to vote.

A special resolution, on the other hand, requires at least 75% of the shareholders entitled to vote to agree to the proposed changes at a general meeting.

Once the resolution has been passed, the company must ensure compliance with Companies House regulations by sending a copy of the resolution, along with the new or amended articles of association, to Companies House.

Company formation experts can provide guidance and assistance with the entire process of changing articles of association, from drafting the new or amended articles to ensuring compliance with regulatory requirements.

Complying with Companies House Regulations

Changing the articles of association involves legal procedures that must be followed to ensure compliance with relevant regulations. Companies House plays a crucial role in overseeing the process and updating the records of companies. Failure to comply with the regulations could result in penalties or legal complications.

The Companies Act 2006 provides guidelines for changing articles of association. Once a special resolution to amend the articles has been passed, a copy of the resolution should be sent to Companies House within 15 days. This period is crucial as it allows Companies House to review the resolution and update the company’s records.

To avoid errors or omissions, it is advisable to seek legal advice or consult a company formations expert when changing articles of association. This will help ensure that the resolution aligns with the Companies Act 2006 and that the amended articles are legally sound.

When the new or amended articles of association have been drafted, a copy of the articles, along with a signed copy of the special resolution, must be sent to Companies House. Companies House will review the documents and update the company’s records accordingly.

It is important to note that until the changes have been registered by Companies House, the existing articles will continue to govern the company’s operations.

Drafting New or Amended Articles of Association

Once the decision to change the articles of association has been made and the special resolution to amend has been passed, it’s time to draft new or amended articles that reflect the proposed changes. It’s recommended to seek professional advice or consult a company formations expert to ensure that the new or amended articles comply with the Companies Act 2006 and are legally sound.

The new or amended articles should align with the terms of the special resolution that has been passed, and should be consistent with the company’s memorandum of association. The memorandum of association outlines the company’s object, its intended activities, and its registered office. The articles of association provide more detailed guidelines on how the company should be run and managed, including the roles and responsibilities of its directors and shareholders, and how decisions should be made.

The new articles of association should be in writing and signed by the company’s directors. A copy of the special resolution to amend the articles, along with the new or amended articles, should be sent to Companies House for registration.

If the existing articles are being amended, it’s important to keep a copy of the original and the amended articles for record-keeping purposes. The amended articles will replace the original set of articles but will only take effect once they have been registered by Companies House.

Implementing the Changes

Once the new or amended articles of association have been drafted, a copy of the articles, along with a signed copy of the special resolution, must be sent to Companies House. It’s important to ensure that the copy of the articles is accurate and complete, as any errors or omissions may result in delays or rejection by Companies House. The documents should be sent via post or electronically through the Companies House online filing service.

After the documents have been submitted, Companies House will review them to ensure compliance with regulatory requirements. If everything is in order, Companies House will register the new or amended articles and update the company’s records accordingly. This process may take several weeks, so it’s essential to plan accordingly.

It’s important to note that the changes to the articles of association will only take effect once they have been registered by Companies House. Until then, the existing articles will continue to govern the company’s operations. It’s crucial to communicate the changes to the directors, shareholders, and other stakeholders to ensure that everyone is aware of the updates to the company’s governing document.

Overall, implementing the changes to the articles of association requires careful planning and attention to detail. By ensuring that the documents are accurate, complete, and comply with regulatory requirements, companies can ensure a smooth transition to the new or amended articles of association.

Remember to keep a copy of the special resolution to amend, along with a copy of the new or amended articles of association, in the company’s records. This will be important for future reference and compliance with regulatory requirements.

Conclusion

Updating the articles of association is an essential step in keeping a UK company’s governance structures and operational guidelines aligned with its evolving needs. Fortunately, amending the articles of association is relatively simple and can be done on a regular basis to keep the company’s governing document up to date.

It’s crucial to review the articles of association regularly and identify any necessary changes to ensure that they are in line with the company’s current operations, best practices, and legal requirements. By doing so, a company can provide clear guidelines for its directors and shareholders and avoid legal complications.

Overall, the process of changing articles of association involves passing a special resolution, drafting new or amended articles, and complying with Companies House regulations. A company formations expert can provide professional advice and guidance on the process, ensuring that the new or amended articles are legally sound and in accordance with the company’s memorandum of association.