Every limited company registered in the United Kingdom must have a set of Articles of Association.
Nevertheless, many UK companies – particularly start-up enterprises – are often unfamiliar with the concept and significance of Articles of Association, and their importance to their organisation.
In this comprehensive guide, we’ll address crucial questions and common concerns regarding a company’s Articles of Association, including:
- What precisely constitutes a company’s Articles of Association?
- The legal requirements for Articles of Association in the UK
- Where to find a company’s Articles of Association in the UK
- Is there a difference between Memorandum and Articles of Association in the UK?
- What steps to take to create a company’s Articles of Association
- What are the ‘Model Articles of Association’ for a private limited company in the UK?
- Procedures for changing a company’s Articles of Association
- Requirements regarding notarisation of Articles of Association
What are Articles of Association of a Company?
When individuals enter into a business partnership, they commonly draw up and sign a partnership deed or agreement that outlines the terms governing their mutual business relationships and partnership operations.
This same logic applies when setting up a company: the member(s) and director(s) of the company must adhere to a governing document called the Articles of Association, which establishes the powers, duties, responsibilities and obligations between the company, its director(s) and member(s).
The specific contents within a company’s Articles of Association vary depending on the company’s operational and ownership structure.
For example, for a sole director/member company, these Articles may be fairly basic and straightforward. Conversely, organisations with multiple directors/members or those involving private equity investment typically require more detailed Articles of Association to safeguard the interests of all members and stakeholders involved.
Legal Requirements for Articles of Association in the UK
Under the Companies Act 2006, every UK company must have Articles of Association. These documents must meet specific legal criteria and be properly registered with Companies House during company formation and whenever changes are made.
Where to Find a Company’s Articles of Association in the UK
Articles of Association are public documents accessible through Companies House. These documents are frequently consulted by existing and potential stakeholders seeking to understand the company’s governance framework.
What Is the Relationship Between a Company’s Memorandum of Association and Its Articles of Association?
Historically, most companies had a Memorandum of Association as well as Articles of Association.
The Memorandum of Association contained, amongst other things, a list of objectives for the company (known as ‘objects’). The length of this document could extend significantly, depending on the scope and complexity of the company’s intended activities.
However, in current times, the Memorandum of Association has evolved into a more streamlined and basic document that must incorporate these essential elements:
- A declaration that the subscriber(s) or proposed member(s) intend to establish a company under the Companies Act 2006; and
- A commitment from each subscriber or proposed member to become a company member and, specifically for companies with share capital, to acquire a minimum of one share.
Nowadays, the Articles of Association have superseded the Memorandum of Association in terms of significance. Indeed, a company’s Articles of Association can be thought of as a dynamic constitutional document that can be amended from time to time during the course of a company’s lifespan. A company’s Memorandum of Association, however, is typically a ‘one-off’ foundational document created at the company’s establishment, rarely requiring later revision.
What Must I Do to Create A Company’s Articles of Association?
When you form a company (a process known as ‘incorporation’) – which is often carried out by incorporation specialists – you must specify whether the proposed company will:
- Adopt a pre-written set of Articles of Association known as the ‘Model Articles of Association’;
- Adopt a blended set of Articles of Association containing the Model Articles as well as certain customised provisions; or
- Adopt an entirely bespoke set of Articles of Association (i.e. not using any of the Model Articles).
Once this process is complete, you’ll receive a certificate of incorporation along with your registered Articles of Association.
The vast majority of UK companies choose to entirely adopt the Model Articles for many reasons, such as convenience, cost savings and ease of use, to name but a few.
What are the Model Articles of Association for a Private Limited Company?
As previously mentioned, Model Articles are a standardised, pre-formulated set of Articles of Association that can be chosen by UK companies during their formation (or at a later date). These are officially registered with Companies House during the incorporation process.
Types of Model Articles and Their Applicability
There are three types of Model Articles that can be selected depending on the type of company being created:
- Model Articles for private companies limited by shares;
- Model Articles for private companies limited by guarantee; or
- Model Articles for public companies.
The most common form of UK company created is the private company limited by shares, which may have different types (known as ‘classes’) of shares. Consequently, the majority of UK companies opt to implement the Model Articles specifically designed for private companies limited by shares.
Changing Articles of Association: Can I Amend My Company’s Articles of Association and, If So, How?
Under UK legislation, companies can amend their Articles of Association through a special resolution, which can be executed either during a general meeting of shareholders or through written means (it’s crucial, however, to check whether the specific Articles of Association of the company contain heightened restrictions on amendments – known as ‘entrenched’ provisions).
Special Resolution Requirements for Amendments
A special resolution, whether involving all members or a specific class of members, needs approval by a minimum majority of 75%. Similarly, for written resolutions to be valid, they must secure approval from members representing no less than 75% of the total eligible voting rights.
Following any amendments, the revised Articles of Association must be submitted to the Registrar of Companies within 15 days of the modifications taking effect.
Do I Need to Notarise Articles of Association for International Use?
There could be various circumstances requiring a company to notarise its documents, including Articles of Association.
For example, if a UK company is planning to establish a subsidiary or branch office overseas, they typically need to provide a notarised (and, in certain instances further apostilled and / or consularised) version of their current Articles of Association as part of the overseas establishment process.
In such situations, it’s important to approach a notary who can, where required, identify and extract the relevant set of Model Articles for the UK company (if appropriate) and/or conduct necessary checks to authenticate and notarise the company’s current Articles of Association.
Conclusion
Every UK company must maintain Articles of Association, which are a set of rules and regulations governing the conduct of the company, its directors and members. These documents form the constitution of a company and establish how it operates.
Choosing appropriate Articles of Association is an important matter as these documents impact not only internal stakeholders but also external parties (such as licensing authorities, financial institutions for loans/financing etc).
At Notary.co.uk, we assist UK companies in properly identifying and notarising their company related documents – including Memorandum of Association and / or Articles of Association – to comply with the requirements of jurisdictions worldwide.
Call us on 020 7630 1777 or email info@notary.co.uk to find out more about our notarial services.