What is the status of a company’s articles of association?
Articles of association are rules governing the internal affairs of a company. All registered companies must have articles of association.
The Companies Act 1985 provided Table A as model articles for companies limited by shares. Following the introduction of the Companies Act 2006, since 1 October 2009, Table A has been replaced by three default model articles aimed at the different types of companies, namely:
• Private Companies Limited by Shares;
• Private Companies Limited by Guarantee; and
• Public Companies.
The model articles for private companies are designed with the needs of small businesses in mind. The model articles for private companies limited by guarantee are closely based on those for private companies limited by shares, with the provisions relating to shares removed.
Every company is required to have articles by law and the articles are legally binding on the company and all of its members. Since 1 October 2009, on incorporation, a company can adopt Model Articles, Model Articles with amendments or bespoke articles and the choice will be indicated on Form IN01. If no preference is specified, then the model articles for that type of company will apply by default. In the case of existing companies, in so far as their articles are inconsistent with the Companies Act 2006, the requirements of the Companies Act 2006 will override those of the existing articles. Many companies have updated their articles in line with the Model Articles and it is recommended that companies do so.
The Articles of Association can be changed by the shareholders passing a special resolution in a general meeting. Any such change must be notified to Companies House.