Malcolm ZoppiThu Sep 28 2023

Understanding Articles of Association in the UK: A Comprehensive Guide

Articles of Association are essential legal documents that govern the relationship between a company, its directors, and shareholders.

what are articles of association uk

Articles of Association are legal documents that outlines how a company is to be governed and operated. It contains rules and regulations that guide the relationship between shareholders, directors, and the company itself.

For companies in the UK, Articles of Association are often accompanied by a Memorandum of Association, which sets out the company’s objectives and establishes its legal personality. Together, these two documents form the company’s constitution.

Model Articles of Association are commonly used by companies in the UK. This provides a flexible and cost-effective means of incorporating a company. However, bespoke Articles of Association can also be created to suit the specific needs of a company.

For limited companies, Articles of Association are a key part of the process for setting up and running the business. Shareholders play a crucial role in decision-making, with Articles of Association outlining the procedures for voting and decision-making.

Key Takeaways

  • Articles of Association are essential legal documents that govern the relationship between a company, its directors, and shareholders.
  • They are often accompanied by a Memorandum of Association, which establishes a company’s legal personality and objectives.
  • Model Articles of Association are a common choice for UK companies.
  • For limited companies, shareholders play a vital role in decision-making, with Articles outlining the procedures for voting and decision-making.
  • Understanding Articles of Association is crucial for setting up and running a successful business in the UK.

Why Do Companies Need Articles of Association?

Articles of Association are an essential element of company formation and management in the UK. Along with the Memorandum of Association, they form the constitution of a company, setting out its purpose, structure, and rules for operation. The Articles of Association define the relationship between the company, its shareholders, and the directors, outlining their respective rights and responsibilities.

Companies need Articles of Association to:

  • Establish the rules and procedures for governing the company
  • Protect the interests of shareholders and directors
  • Provide clarity and transparency on the management of the company

The Articles of Association can be changed with the passing of a special resolution of at least 75% of the shareholders agreeing to the changes. Companies must then notify Companies House within 15 days of making any changes to the Articles of Association.

If a company does not have Articles of Association, it will be governed by the default rules set out in the Companies Act 2006. However, it is highly recommended that companies create their own Articles of Association without relying on default rules.

Companies House is the government agency responsible for maintaining the UK’s register of companies. It provides guidance and assistance on the formation, registration, and management of companies, including advice on how to change the Articles of Association.

Overall, Articles of Association are crucial for protecting the interests of a company’s shareholders and directors, while providing clarity and transparency on the management of the company. They allow for flexibility and customisation to meet the specific needs of the company.

Understanding Model Articles of Association

Model articles of association are standard pre-prepared documents that can be adopted by a company during its formation which can be accessed on the Companies House website.

When setting up a limited company, it is a legal requirement to file both the memorandum of association and articles of association with Companies House. The memorandum of association outlines the company’s purpose and establishes its existence, while the articles of association set out the rules for the company’s internal management.

Model articles of association are designed to work with the memorandum of association and provide a starting point for companies to create their own bespoke articles, tailored to their specific needs.

If a company intends to use model articles of association, they can do so by simply including a statement in the application for company formation. This statement declares that the company will adopt the model articles rather than creating bespoke articles.

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If using model articles of association, a company can make changes to them to suit its needs. The process for changing model articles of association is similar to that of amending bespoke articles. A special resolution must be passed, and the amended articles must be filed with Companies House within 15 days.

If a company needs assistance with changing their articles of association, they can get in touch with Companies House who will offer guidance. Companies House also provides a wealth of information on its website regarding the memorandum and articles of association, including detailed guidance on how to set up a limited company and change the articles of association, amongst other topics. Alternatively, a company could get in touch with a lawyer.

Types of Articles of Association in the UK

There are different types of articles of association in the UK, each designed for specific types of companies and organisations. The community interest companies, for instance, are governed by a specific set of regulations and articles of association that reflect their social and environmental objectives.

A company limited by shares is required to have articles of association that clearly state the rights and obligations of its shareholders. These articles determine issues such as the transfer of shares, voting rights, and meetings of the company’s directors and members.

The Companies Act 2006 introduced new provisions for companies limited by shares, allowing for greater flexibility in drafting articles of association.

In the case of companies limited by guarantee, the articles of association must reflect the non-profit nature of the company and include provisions for distributing any surplus funds among members in the event of winding up.

It’s important to note that changing the memorandum of association, the document that sets out the company’s objectives and structure, requires a special resolution.

How to Amend and Customise Articles of Association

Amending Articles of Association could be due to changes in the company’s structure, growth, or the need to add new clauses. Additionally, companies may opt for bespoke articles of association for more specific requirements. Here’s what you need to know about amending and customising articles of association.

Company Formation

The process of amending articles of association starts with the company formation. This involves the preparation of the memorandum and articles of association, which must be submitted to Companies House within 15 days of incorporation. The articles of association are a crucial component of the company formation process as they outline the internal management and governance of the company.

Bespoke Articles

Bespoke articles of association are tailored to meet the specific requirements of the company. This could involve the inclusion of clauses relating to the distribution of profits, appointing directors, or changing the share structure. Companies opting for bespoke articles of association may seek legal advice to ensure compliance with the Companies Act 2006.

Incorporation

To amend the articles of association, a special resolution must be passed. A special resolution is a resolution passed by at least 75% of shareholders or members who are entitled to vote. Additionally, the company’s articles of association must allow the proposed amendment. Once the special resolution has been passed, the amended articles of association must be submitted to Companies House within 15 days of the resolution.

Companies House

The amended articles of association must be submitted to Companies House using the appropriate forms. The company must complete the relevant forms and include a copy of the special resolution and amended articles of association. Companies House will then review the documents and, if satisfied, make the necessary changes to the company’s record.

In conclusion, the process of amending and customising articles of association involves the preparation of bespoke articles, passing a special resolution, and submitting the amended articles of association to Companies House. Companies should seek legal advice to ensure compliance with the Companies Act 2006.

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FAQ

Q: What are Articles of Association?

A: Articles of Association are a legal document that sets out the rules and regulations for the internal management of a company. They outline the rights and responsibilities of the shareholders, directors, and other officers of the company.

Q: What is the difference between Articles of Association and Memorandum of Association?

A: The Memorandum of Association is another legal document that is required to form a company in the UK. It states the company’s name, registered office address, objectives, and the amount of share capital. On the other hand, Articles of Association provide detailed regulations regarding the internal management of the company.

Q: What is Companies House?

A: Companies House is the UK government agency responsible for maintaining the official register of companies. It keeps records of company information and any changes made to documents such as the Articles of Association.

Q: Who is a shareholder?

A: A shareholder is an individual or entity that owns shares in a company. Shareholders have certain rights, such as voting on important company decisions and receiving dividends.

Q: How do I set up a limited company in the UK?

A: To set up a limited company in the UK, you need to register it with Companies House. You will need to complete the necessary registration forms and provide details such as the company’s name, registered office address, and the names and addresses of the shareholders and directors.

Q: What is the association and the memorandum in Articles of Association?

A: The association refers to the group of individuals or entities who have come together to form the company. The memorandum is a separate document that contains important information about the company, including its objectives and share capital.

Q: How can I get in touch with Companies House?

A: You can get in touch with Companies House by visiting their website and finding the relevant contact information. They have a helpline and online support to assist with any queries or concerns regarding company registration and filing of documents.

Q: How can I change the Articles of Association of my company?

A: To change the Articles of Association of your company, you need to follow a specific procedure. Firstly, you must obtain approval from the shareholders through a resolution. Then, file the amended articles with Companies House, along with a completed form and the necessary filing fee.

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Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

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Get the specialist support you need

Whether you require specialised knowledge for your business or personal affairs, Gaffney Zoppi can support you.