Hi there, Nicholas Campion here from 1st Formations, and welcome to another episode
of Whiteboard Thursday, where we provide advice on a wide range of business and company matters. If
you find this video useful and you enjoy it, please give us a like and share it with your friends and
colleagues. But for now, let's get started. Today, I am going to discuss the articles of association, and
specifically whether you need them and what their purpose is. I'll also cover what are known as the
'Model' articles, as well as touching on the memorandum of association. So, first things
first, does a company need articles of association? Very simply, the answer is
yes, all limited companies registered in the UK must have articles of association. This is the
main constitutional document of your company, which is first adopted during the incorporation process,
and it defines the rules and regulations that the company and its officers are legally required to
follow at all times. You can choose default Model articles provided by a Companies House, or you can
create a tailor-made version to suit the needs of your company; however, the vast majority of companies
have no need to create their own. If you're thinking about forming a company, don't
worry about supplying your own articles, as they're normally provided by your
company formation agent as part of their service. OK, let's first explore the purpose of the
articles of association. In very simple terms, articles of association specify the rules that
company officers, that is the directors and secretaries, must implement when running the
business. They cover a range of topics, including: the rights of the company members,
also known as the shareholders or guarantors; the limited liability of members; the duties
and powers of company directors; the procedures for appointing and removing company officers;
how decisions are made; the procedures for issuing and transferring company shares; how to approve
and issue dividends; and the requirements for board meetings and general meetings.
It is important that all company officers and members are familiar with the contents of the
articles of association, and companies should keep a copy at their registered office or SAIL address.
You can also view a company's articles of association, as well as other incorporation
documents and details, online via Companies House Service. If they're not available to view, it usually
means that the company is using the Model articles of association. Which leads us nicely
onto the next question - what are 'Model' articles of association? Well, they are standard or default
sets of articles that most companies use. Unless you alter them or create your own version, your
company will adopt the relevant Model articles in their entirety during the incorporation process.
Although limited in scope, Model articles provide a good base, particularly for small companies with
only one or two directors and shareholders. The Companies Act 2006 prescribes different versions
of Model articles for private companies limited by shares, private companies limited by guarantee,
and public companies limited by shares, also known as PLCs. You can view and download Model
articles online at the GOV.UK website - and the link is included below.
It is also worth noting that you can change the articles of association of your company at any point,
provided a special resolution of the members is passed in favour of the proposed amendments.
In order to pass the special resolution, a majority of at least 75% of the shareholders'
votes must be cast in support of the motion. And finally, please be careful not to confuse
articles of association with the memorandum of association. The memorandum of association
is another constitutional document that all UK limited companies must have. Created during the
company formation process, the memorandum lists the names of the initial subscribers, or first
members, and certifies that each individual agrees to: form the company under the Companies Act 2006;
become a member of that company; and that they take at least one share, if of course
it's a limited by shares company. The memorandum of association is a matter of public record and
can be viewed online via Companies House Service. Additionally, it's a historical document, which
means it can't be amended after incorporation or removed from the Companies Register. And there you
have it. Today I have discussed the question - does a company need articles of association? And the
answer is absolutely yes, as they are the rules according to which a company must be
run and administered. Together with the memorandum of association, they form the company's
constitution. It's worth mentioning that 1st Formations provide bespoke articles of
association with our incorporation packages, which are very similar to the Model articles,
although they are slightly more comprehensive with regards to best practice and company management. If
you have any questions, please leave them in the comments section below, and in the meantime be sure
to subscribe to our channel to get more advice on limited companies, reporting requirements, and tax
obligations. We're always happy to hear from you, and we can't wait to help. Until next time, cheerio.