A company’s articles of association essentially act as its rulebook, specifying the internal rules and regulations the members and directors must follow. Every private and public company formed in England and Wales, Scotland, and Northern Ireland is legally required to have a set of articles at the time of incorporation.
The model articles are a set of standard articles of association that companies are allowed to adopt for themselves. Below, we explain everything you need to know about them, including their contents and how to amend them.
Key Takeaways
- The articles of association are a legal document that governs how a company will operate. They legally bind the company, its members, directors, and secretaries.
- The model articles of association are a default set of articles that companies can adopt. They are automatically prescribed to UK companies at incorporation unless the initial members choose to use their own bespoke articles.
- Some of the provisions in the model articles include members’ liabilities, directors’ powers, and administrative arrangements. You can change individual provisions and entire articles at any time by passing a special resolution.
What is the importance of model articles of association?
The model articles were introduced on 1 October 2009, replacing ‘Table A’ as the default set of articles for UK limited companies incorporated on or after that date. They are a legal document that outlines how a company will run, the members’ and directors’ responsibilities, and how decisions will be made.
They are provided under The Companies (Model Articles) Regulations 2008, with three versions of the model articles available for three different limited company structures in the UK:
- Private companies limited by shares
- Private companies limited by guarantee
- Public limited companies (PLC)
Model articles of association automatically apply to every UK company upon incorporation unless it adopts altered or bespoke articles instead. In reality, most new companies stick with the default provisions, as they provide an ideal foundation and are most appropriate to small companies with limited risk of disputes between shareholders and directors.
However, it is possible to tailor specific provisions in the model articles or create entirely new ones at any time after incorporation to meet the changing needs of the business.
Who is bound by the model articles of association?
Even though the model articles don’t require any signatures, their provisions are legally binding and apply to:
- The company
- Members (or guarantors in the case of a private company limited by guarantee)
- Directors
- Secretaries (if applicable)
What is included in the model articles of association?
The provisions included in the model articles of association broadly cover five essential areas (where applicable):
- Liability of members – Shareholders’ or guarantors’ financial liability is limited to the fixed nominal value of their shares or guarantees
- Directors – Powers and responsibilities, procedures for decision making, appointment and termination, remuneration and expenses
- Shares and distributions – Paying for shares, rights attached to shares, allotment and transfers of shares, payment of dividends, and other distributions
- Decision-making by members – Organisation of general meetings, voting at general meetings, and additional decision-making options
- Administrative arrangements – Permitted forms of company communication, company seal, inspection of company records, directors’ indemnity, and insurance
Can I use model articles for a company with one director/shareholder?
A private limited company always needs at least one director and shareholder. It’s common for one person to be both. Therefore, a company with one director and shareholder can use the model articles despite the ambiguity of Model Article 11(2):
“The quorum for directors’ meetings may be fixed from time to time by a decision of the directors, but it must never be less than two, and unless otherwise fixed it is two.”
Naturally, having at least two directors at a general meeting would be impossible in a company with only one director. This provision is clearer when combined with Article 7(2):
“If –
- the company only has one director, and
- no provision of the articles requires it to have more than one director,
the general rule does not apply, and the director may take decisions without regard to any of the provisions of the articles relating to directors’ decision-making.”
The provision for a quorum (the minimum number of present directors required) of two directors for meetings only applies to companies with two or more directors.
In summary, it is generally accepted that the model articles can be used for a company with only one director/shareholder. However, recent court cases have shown that companies may want to amend the articles slightly to ensure there is no ambiguity regarding a sole director’s ability to make company decisions. All incorporations by Quality Company Formations include provisions in the articles of association to help make this point clear.
When are model articles of association not suitable?
Whilst a great starting point for many new companies, the standardised model articles will not suit everyone from the outset. You may need to change some provisions or adopt bespoke articles before or after incorporation when:
- Issuing multiple share classes or any share class other than Ordinary
- Providing the option to allot unpaid, partly paid, or fully paid shares
- There will be alternate directors
- Restricting directors’ powers
- Granting additional powers to directors
- Including restrictions on share transfers
- Requiring a private limited company to hold annual general meetings
- Holding virtual meetings and giving electronic notices
- Removing conflict provisions that prevent directors from voting if they have a conflict of interest
Changing the model articles
No two companies are the same, and businesses evolve over time. This means you may need to add, remove, or adjust some provisions in the model articles – or create entirely new articles – to suit the company’s changing circumstances.
As long as any changes to the model articles abide by company law, members can agree to change the articles of association by passing a special resolution at a general meeting or in writing. This type of decision requires a majority vote of at least 75% of eligible shareholder votes.
If a company changes its articles, a copy of the new articles and the members’ resolution must be delivered to Companies House within 15 days of agreement. If a company reverts to the model articles, there is no need to send a copy of the articles, but Companies House still needs to know about the change and receive a copy of the resolution.
Where do I get articles of association for my company?
You can set up any type of company online through Quality Company Formations using our affordable and specialist incorporation packages, including private companies limited by shares and private companies limited by guarantee. Your incorporation includes a modified form of articles of association.
Once Companies House has approved your application, we will email you your articles of association and other incorporation documents. The entire company formation process usually takes less than 24 hours.
Our Company Secretarial Team can also provide new articles for existing companies, including bespoke and sole director provisions.
In summary
Model articles of association are a standard set of articles of association that companies can choose to adopt at incorporation or at a later point. They provide standard rules for running the company and the members’ and officers’ roles and responsibilities.
They are a legally binding document. However, you can change them at any time by passing a special resolution.
If you prefer to form a company under bespoke articles, Quality Company Formations can help you with this. We offer various corporate services, including drafting articles of association tailored to your company’s requirements.
Thanks for reading. For more articles like this, take a look at the Quality Company Formations blog. If you have any comments or questions about the topics discussed above, please post them below, and a member of our team will get back to you.
Please note that the information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While our aim is that the content is accurate and up to date, it should not be relied upon as a substitute for tailored advice from qualified professionals. We strongly recommend that you seek independent legal and tax advice specific to your circumstances before acting on any information contained in this article. We accept no responsibility or liability for any loss or damage that may result from your reliance on the information provided in this article. Use of the information contained in this article is entirely at your own risk.
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