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A company’s articles of association is a legally binding contract between the company and its shareholders. The articles contain the rules that set out how the company should be run, to which the company directors must adhere.
The articles of association deal with fundamental administration of the company such as procedures for shareholder decisions, the appointment of directors and the issue and sale of shares.
Standard default articles exist and these can be changed by a company so that the constitution is tailored to suit the particular requirements of a company.
At CWJ, our team of corporate lawyers have extensive experience in drafting robust articles of association that provide a sound legal framework for companies. We also
- review and amend existing articles of association and
- give advice on the interaction between articles of association and shareholders’ agreements.
Our lawyers can assist with…
Drafting articles of association
We will work with you to define exactly what you want to be included in your articles of association. This is likely to include details in the following areas:
- Regulating shareholder liability to the amount paid for their shares or the amount of any guarantee where the company is limited by guarantee;
- The number of directors and their powers and duties;
- The number of shares that will be issued, the rights that each type of share will have and how dividends will be dealt with;
- Shareholders’ voting rights and how decisions will be made, to include how many shareholders need to attend a meeting.
- Provisions which are helpful to majority shareholders who want to sell the company against the wishes of a minority shareholder.
- ‘tag’ provisions which help protect the interests of a minority shareholder if the company is to undergo a change of control.
Reviewing and amending articles of association
As circumstances change and a company grows, it may be necessary to revisit the legal documentation that underpins it. We can review your articles of association and advise you on amendments that can be made to strengthen it to ensure it adequately supports the needs of the business.
We will draft new articles and explain the legal process to you for putting these into effect, including missing a shareholder resolution.
Advice on the interaction between articles of association and shareholders’ agreements
A company’s articles of association should mesh with any shareholders’ agreement, which will deal privately with some related issues. It is important that the two documents are drawn up with reference to each other to prevent a conflict.
Our Corporate team will ensure that both your articles of association and any shareholders’ agreement work together to allow your business the flexibility and protection necessary for it to flourish.
Our expertise with articles of association
Our Corporate and Commercial team have a strong commercial focus and will work with you to understand the needs of your business and aims so that we can draw up suitable articles of association for your organisation.
We regularly act for businesses of varying different sizes, in a variety of sectors, meaning we have the necessary commercial understanding to identify the best strategies for your company agreements and the legal expertise to ensure that these are effectively implemented.
Our Corporate & Commercial team’s expertise has been independently recognised in the following ways:
- Ranked Band 1 for Corporate/M&A: SME/Owner-managed Businesses by Chambers & Partners
- Head of Corporate and Commercial Ben Madden is individually ranked Band 1 by Chambers & Partners while Senior Partner Andrew Wright is recognised as an Eminent Practitioner
- Ranked Tier 3 for Corporate & Commercial by Legal 500
Our legal fees for articles of association
We know that cost is important to you when dealing with the legal aspects of your business. We provide the expertise you would expect from a City-based firm with exceptional service and always aim to price competitively, benchmarking our rates against comparable firms.
Our pricing is clear so that you have complete certainty as to the costs involved in putting articles of association and other company documentation in place. Ordinarily, we can calculate our fees on an hourly basis where appropriate.
We offer flexible payment options to suit your business requirements.
Find out more about our fees.
Articles of association FAQs
What are articles of association?
Articles of association govern a company’s administrative affairs. They will be adopted by a company so that its directors and members understand what is expected of them and how the company administration will be dealt with.
What is included in articles of association?
Articles will include issues such as directors’ and members’ rights, duties and responsibilities, profit distribution, decision making, how directors can be appointed and removed and other administrative points
Can I change my company’s articles of association?
Articles of association can be amended or repealed by special resolution of the company’s members. A special resolution requires over 75% of the voting shares.
Are articles of association public?
A company’s articles of association are filed at Companies House, meaning they are available to the public.
Does a sole trader need articles of association?
A sole trader does not need articles of association unless they decide to form a company.
Should I use an articles of association template?
It depends on your circumstances, but a standard template may work in the short-term. However, without articles of association that have been specifically tailored to your business, you could find that some of the clauses are inflexible or that the powers that you want have not been included.
If you have bespoke articles of association drafted for your company, you can set out exactly how you want the administrative affairs to be run.
Template articles are designed to try to cover every eventuality for every type of business, meaning they do not always stand the test of time. Bespoke articles of association can be reviewed and tweaked as necessary over time. You can ensure that you give powers to whom you want while limiting the involvement of others, for example, by issuing shares with no voting rights attached.
What is the difference between a memorandum of association and articles of association?
A memorandum of association sets out the company’s initial shareholders or guarantors, stating that they wish to set up a company. It is a basic historic record of their membership of the company.
The articles of association on the other hand, deal in depth with the administrative affairs of the business.
Do charities have articles of association?
If a charity is set up as a company limited by guarantee, it will need a memorandum and articles of association and will also need to be registered at Companies House. It should also be registered with the Charities Commission. Some charities choose to operate as a limited company. Other options include a charitable trust or an unincorporated association or a charitable incorporated organisation (C10), registered with the charities commission.
Are directors bound by articles of association?
Both directors and shareholders are bound by a company’s articles of association. This is why it is essential to ensure that they are appropriate for the business in question so that those involved with the day-to-day running of the organisation and who are making the key decisions have the assurance of knowing that their actions are within the authority given to them.
Consult our solicitors in Orpington
To discuss how our corporate lawyers can help put the right articles of association in place for your business, please contact us on 01689 887887 or fill in our enquiry form.