‘Articles of association’ are what a company uses to outline how it’s run and managed. They’re a legal requirement for all private and public companies in the UK, so they’re agreed by the directors and shareholders in order to register the company although they might be changed over time. ‘Model’ articles are the standard default version of these.
You might also hear them referred to as ‘model articles’, or simply just ‘articles’ – all ways of describing the same thing.
Articles of associate were introduced in October 2009, so any private or public company incorporated on or after that date will be automatically assigned model articles through Companies House. Typically, this document is received via email or through the post.
Every business is different, so model articles are a way to standardise and regulate the way that processes are governed and how a company operates.
Articles of association are normally used to define the rights and responsibilities of a company’s directors and shareholders (members) so that everyone has a clear understanding of what their role entails, and what they’re entitled to as a result.
A company’s articles are a bit like the business’s rule book, so they can also be used to restrict activity. For instance, if shareholders want to minimise the extent to which directors can make business decisions, they can add a clause to the articles. It’s another way of adding security and providing reassurance.
The model articles that companies are automatically assigned are standard, foundational articles that work perfectly well in most cases, and particularly where major disputes between directors and members, or structural company changes, are unlikely.
That said, a company can (and should) create its own bespoke model articles of association if there are more complicated factors which need consideration.
Processes around decision-making, voting, delegation, and conflicts of interest
Appointment and termination of directors and members
Processes related to shares and dividends
Methods of communication
Information around directors’ indemnity and insurance
Processes related to company records inspection
Use of the company seal where relevant
This list is by no means exhaustive though and only summarises the most essential requirements.
Can the articles of association be changed?
Yes, changes can be made to the standard model articles provided by Companies House.
In fact, as mentioned earlier, some limited companies choose to create their own bespoke articles tailored to their particular needs. This can be done by tweaking the model articles available from Companies House or by creating them from scratch.
Reviews and amendments
Whether you choose to adopt the standard model articles or construct your own, it’s fairly common for them to need changes over time. Companies evolve and move in different directions all the time, so you may come to a point when reviewing and amending your model articles makes sense.
You might need to adjust existing articles, create new provisions or remove certain parts of the articles to align with the business in its present state.
If you wish to change your model articles in any way, you should hold a general meeting or express the revisions in writing. The changes won’t be ‘adopted’ until they’re voted in with a majority vote of at least 75% by the company’s shareholders.