WHAT ARE ARTICLES OF ASSOCIATION?
The Articles of Association regulate the internal affairs of a company such as the division of power between the directors and shareholders, the structure and operation of the board, the rights attached to share classes, the issue and transfer of shares, declaration of dividends and the powers and duties of directors. They are binding on the shareholders and the company as a form of special contract.
On incorporation it is common to either adopt the appropriate Model Form (provided by regulations made pursuant to the Companies Act 2006) or to adopt the Model Form with a number of amendments that are appropriate for the company being formed.
During the life of a company its Articles may need to be amended for a number of different reasons, examples of which are listed below:
A special resolution (of at least 75% of the shareholders) is required to amend the Articles of Association of a company. That resolution, together with the new Articles, needs to be filed at Companies House. Any requirements set-out in a Shareholders Agreement also need to be considered.
Do I need to amend my articles?
Certain changes to the company’s share capital and internal affairs can only be effected by amending the company’s Articles of Association, such as the introduction of a new class of shares. Others can equally be effected by entering into a Shareholders Agreement. We would be happy to advise you in this regard.
Our Articles of Association Drafting Service is suitable for companies incorporated in the United Kingdom.
Companies amend their Articles of Association for a number of reasons, including to:
- Create a new class of shares (including Preference Shares).
- Vary rights attached to share classes.
- Entrench certain articles (including entrenchment of directors).
- Regulate the transfer of shares.
- Amend the division of power between directors and shareholders.
- Benefit from provisions introduced by the Companies Act 2006.
A company’s Articles may also need to be amended as part of a larger transaction. For example: as part of a group reorganisation for tax purposes, a management buy-out (MBO) or a private equity transaction.
If you wish to amend the Articles of a company for one of the reasons set out above, or for any other reason then we can assist you by:
- Providing advice on your best course of action.
- Considering your existing Articles and any other document that may impact on these rights such as a Shareholders Agreement.
- Drafting appropriate amendments to the Articles.
- Drafting shareholders resolutions to approve and adopt the amended articles.
- Preparing the necessary filings at Companies House.
We also draft Articles of Association for specialist companies, for example:
- Community Interest Companies.
- Guarantee Companies.
- Property Management Companies.
We will provide you with a fixed quotation for preparing all of the necessary documentation.
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