Articles of Association for Sole Director Companies
In the 2022 case of Hashmi v Lorimer-Wing, the High Court suggested that under the model articles the minimum number of directors required for a company to function is two. Whilst this is contrary to what was the previously accepted legal wisdom, the general legal consensus is that for sole director companies that use standard, unamended model articles, their boardroom decisions may now be challenged and declared invalid. The case has therefore called into question the ability of a sole director to run a company.
Considering this, many sole director companies may choose to adopt new articles of association to resolve the confusion. These template articles are based on the model articles for private companies limited by shares but at the beginning disapply model article 11(2) so that decisions made by the sole director are valid.
These template articles may be used by new or existing sole director companies.
These articles should be read in conjunction with the guidance note and other templates that relate to the case of Hashmi v Lorimer-Wing as well as considering the subsequent case of Re Active Wear which gives a contrary judgment to Hashmi.
It is recommended to seek independent legal advice before making any changes to a company's constitution.
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