Have you just set up a company, or are you considering doing so, and are wondering what the articles of association are? The articles of association are the rules for running your company. Learn why you need them, what they cover, how to write your own articles of association, and more.
Key takeaways
- Every UK limited company must have articles of association, which set the rules for how the company is run.
- Model articles often suit single-founder companies. However, many companies choose to adopt amended/bespoke articles, especially growing companies, those gaining investment, or where multiple people are involved.
- You can change your articles at any time by passing a special resolution and filing the new set at Companies House within 15 days.
What are articles of association?
Your articles of association are the main part of your company’s constitution. Your articles of association should say how your directors should be appointed or dismissed and the powers and responsibilities they have, including decision-making procedures for directors.
You can also outline your shareholders’ rights and their decision-making procedures in your articles of association.
Companies House publishes your articles of association on its public register of companies.
The memorandum of association is a separate document that records the company’s formation. Your memorandum of association is a short statement signed by the first shareholders when the company was formed. It confirms they wanted to set up the company and agreed to take shares in it. Companies House keeps it on the register, and it can’t be changed.
Why are articles of association important?
Your company must have articles of association – it’s a legal requirement. Your articles of association form a legal contract between your company and your shareholders, and the shareholders themselves.
Everything you set out in your articles of association can be legally enforced and must be followed, unless another law overrides them.
If you or a fellow director acts against your obligations in your articles of association, those actions can be challenged and may be invalid. Your shareholders could take legal action against your company if their rights were affected when you or a fellow director broke the rules in your articles of association.
What are model articles?
The model articles are standard articles of association that are set out in regulations made under the Companies Act 2006. When you set up your company, you can choose the model articles as a default option.
Make sure you use the right version of the model articles. There are three separate versions depending on the type of company you set up. Choose from the following options:
- Model articles for private companies limited by shares
- Model articles for private companies limited by guarantee
- Model articles for public companies
What’s included in the articles of association?
Below are some of the key provisions that you should include in your company’s articles of association:
| Provision | What it means |
|---|---|
| General authority of company directors | What directors can and can’t do. |
| The procedure for company directors to make decisions | Which decisions directors can make without shareholder approval and those that need shareholder approval. Also sets out how directors can make decisions – usually by majority approval at a board meeting or unanimously in writing |
| Appointment and termination of company directors | Who can appoint a director, how that happens, and the events that end a director’s appointment, like resignation. |
| Remuneration and expenses of company directors | How much each director can be paid and how much of the company’s money they can spend in their work capacity. |
| Powers of the company to issue new shares | How many new shares a company can issue and whether existing shareholders should be offered new shares first. |
| Payment of dividends and other distributions | The process for declaring and paying dividends, and how shares can be transferred. |
| Organisation of general meetings and voting process | How general meetings of shareholders are held, like how many people need to attend for the meeting to be valid (known as a quorum). Private companies don’t have to hold an annual general meeting (AGM) unless their articles say so. |
| Directors’ indemnity and insurance | Whether the company will cover any legal costs or liability a director faces because of their work for the company. Whether the company has insurance covering its directors. It generally can’t cover their liability to the company for breach of duty or trust, only some costs and third-party liabilities. |
Model, amended, or bespoke articles: Which do you need?
If you find your articles don’t suit your business, you can amend them or create your own bespoke articles. This will provide clarity and reassurance to your shareholders and fellow directors, minimising the risk of confusion or conflict.
You should review the nature of your company and the provisions it requires. This ensures everyone’s needs and expectations are met.
Your articles of association must comply with the Companies Act 2006. We strongly suggest you get advice from a legal practitioner when drafting your own articles of association.
The following table outlines the different types of articles of association you can adopt.
| Model articles | Amended model articles | Bespoke articles | |
|---|---|---|---|
| What they are | The standard, off-the-shelf articles published by the government, adopted in full without changes. | The model articles with some provisions you’ve reworded, added, or removed to suit the company. | Articles written from scratch, tailored to the company rather than based on the model articles. |
| Why choose them | You want the simplest, quickest, and cheapest option, with no need for anything beyond the standard rules. Most companies take this route. | The model articles are mostly suitable, but you need to adjust specific points, such as share transfers, share classes, shareholder rights, director conflicts, or decision-making. | You need a structure that doesn’t fit the model articles, for example, complex ownership, investor requirements, or detailed governance rules. This is also the most costly and time-consuming option. |
Features such as multiple share classes, pre-emption rights, drag-along and tag-along rights, and leaver provisions are not tied to one type of articles. Some can be used under the model articles, and many can be added by amending them or included in bespoke articles. The choice is about how much customisation the company needs.
If you set up your business with Rapid Formations, we’ll send you a copy of your articles of association along with the other official documents you’ll need.
Poorly drafted articles can cause disputes between shareholders and leave the company in breach of the Companies Act 2006. If you amend the model articles or write your own, we strongly recommend seeking legal advice so they are accurate, enforceable, and right for your company.
Nicholas Campion, Director of Company Secretarial, Rapid Formations
How to set up a company with bespoke articles
You should follow these steps to set up a company with bespoke articles:
- Agree with your co-founders what the articles of association need to cover.
- Draft the amended or bespoke articles. We strongly suggest this is done with the help of a solicitor.
- Check the articles of association comply with the Companies Act 2006.
- Submit your articles of association with your incorporation application.
You must pay £100 to register your company online or £124 to register your company by post. Companies House usually takes longer to process postal applications.
How to change your articles of association
You should follow these steps if you want to change your articles of association after your company has been registered:
- Draft the changes
- Pass a special resolution (as a written resolution or at a general meeting) with at least 75% shareholder voting in favour.
- File the resolution and the amended articles of association with Companies House within 15 days of the changes being made.
What are entrenched provisions?
You can make it harder to change parts of your articles of association by requiring more than a special resolution to change them. When you do this, you make this part of your articles of association an ‘entrenched provision’ under section 22 of the Companies Act 2006.
For example, if you want to protect minority shareholders, you can make certain provisions of your articles of association entrenched, so that any change to them requires the agreement of all shareholders. This means a shareholder with only a few shares has the same ability to block a change as a shareholder with many.
You must use the following forms to notify Companies House of entrenched provisions in your articles of association within 15 days of including them. You should include a copy of the revised articles of association and the resolution that you passed agreeing to the change.
| Form | Purpose |
|---|---|
| CC01 | Tell Companies House that you’ve added an entrenched provision to your articles of association. |
| CC02 | Tell Companies House that you’ve removed an entrenched provision from your articles of association. |
| CC03, or Statement of compliance | Tell Companies House you complied with the rules in your articles of association, or with a court order or other similar authority order, when you changed an entrenched provision in your articles of association. |
Articles of association vs shareholders’ agreement
A shareholders’ agreement is a contract between all or some of your shareholders and your company. It covers how you’ll make decisions about the business, and how you’ll manage relationships and resolve disagreements.
The following table outlines some of the differences between a shareholders’ agreement and the articles of association.
| Shareholders’ agreement | Articles of association |
|---|---|
| Optional | A legal requirement |
| Private – it can’t be viewed by the public | Publicly available |
| Deals with the relationship between the shareholders, including share transfers, exits, non-competes, etc. | Focuses on how the company is run, including shares, directors, meetings, and voting. |
If you have multiple shareholders and want to make it clear how any disputes between them will be managed, we recommend having a shareholders’ agreement as well as your articles of association. Having a shareholders’ agreement will reassure shareholders with a small number of shares – known as minority shareholders – that their rights and interests will be respected.
Getting your articles of association right
Many company founders decide the unaltered model articles suit their company. If you think you need more tailored articles of association, you can write your own or make changes to the model articles. Make sure your articles of association comply with the Companies Act 2006 and let Companies House know you’ve made changes within 15 days of making them. Make sure you review your articles of association before adding shareholders or raising investment.
Form your company with articles of association that are ready to go. Register your company with us and receive a copy of your articles of association as part of the service. Or discuss your plans to draft bespoke articles of association with our company secretarial team by calling 020 3984 5385.
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