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Memorandum and Articles of Association

Memorandum and Articles of Association

All limited companies must have a set of rules, known as Articles of Association, that company officers must follow as required by the Companies Act 2006.

At Lawhive, our network of corporate lawyers specialise in drafting comprehensive articles of association that are tailored to your company’s specific needs. They can also review and amend existing articles and provide expert advice on how articles of association interact with shareholders’ agreements.

Contact our legal assessment team to request a free case evaluation and fixed-fee quote.

• What are Articles of Association?

• What should be included in Articles of Association?

• When do you need to register Articles of Association?

• Why do you need Articles of Association?

• Can I write my own Articles of Association?

• Who is bound by the Articles of Association?

• Can a company's Articles of Association be changed?

• What is the difference between a Memorandum of Association and Articles of Association?

• What are model Articles of Association?

• Does a sole trader need Articles of Association?

• What happens if a company breaches its Articles of Association?

• How much do Articles of Association cost?

What are Articles of Association?

Articles of Association are the chosen rules that govern how a company operates internally. These rules are decided upon by the company’s members and form a legally binding contract between the company and its members, and among members themselves. Essentially, the Articles of Association serve as the blueprint for how a company operates and, once a company is registered with Companies House, these articles become a public document.

What should be included in Articles of Association?

Articles of association should include:

• Directors’ and members’ rights, duties and responsibilities

• Guidelines on profit distribution

• Decision-making processes

• Procedures for appointing and removing directors.

When do you need to register Articles of Association?

Unless a company is using model articles provided by section 20 of the Companies Act, it must register its unique articles of association. The Articles of Association that a company registers should be presented as a single document and consecutively numbered paragraphs for easy reference.

Why do you need Articles of Association?

Articles of Association regulate the management of a company. They’re legally binding documents that ensure the company operates within the boundaries of the law and that decisions made by the company are in line with legal requirements.

Can I write my own Articles of Association?

You can draft your own articles of association and include them when submitting your application to Companies House. However, it is not generally advisable without proper guidance from a solicitor.

Who is bound by the Articles of Association?

The Company

The company has to follow its Articles of Association, which outline various aspects of operations, such as decision-making processes, shareholder rights, and director responsibilities.

Company Directors

Directors are legally required to comply with the company’s Articles of Association, which should dictate the directors’ powers, duties, and responsibilities.

Shareholders

The company's Articles of Association also bind shareholders. These rules outline their rights, such as voting rights and dividend entitlement.

Can a company’s Articles of Association be changed?

A company’s Articles of Association can be changed by a special resolution, which is a formal decision made by the company’s members. There are, however, specific regulations in charities legislation regarding how charities can change their constitutions and the implications of such modifications.

What is the difference between a Memorandum of Association and Articles of Association?

A Memorandum of Association is a document signed by all the initial shareholders or guarantors stating their intention to form a company. This document is a legal requirement under the Companies Act 2006.

On the other hand, the Articles of Association outline how the company will be run, covering things like shareholder rights, director responsibilities, and decision-making processes. Both are essential documents for any company registered under the Companies Act 2006.

What are model Articles of Association?

The Secretary of State can create standard sets of articles of association, known as model articles. There are specific sets of Model Articles designed to meet the needs and legal requirements of:

• Private companies limited by shares

• Private companies limited by guarantee

• Public companies.

A company can adopt all or some of the provisions outlined in the model articles.

If the Secretary of State changes the model articles, this won’t affect companies registered before the changes were implemented.

Further, when a limited company is formed, if no articles are registered or the registered articles do not exclude or change the relevant mode articles, the relevant model article becomes part of the company’s articles.

Does a sole trader need articles of association?

No, a sole trader does not need articles of association unless they decide to establish a company. This is because sole traders operate as individuals and are not governed by the same corporate structure as a company which needs articles of association.

What happens if a company breaches its articles of association?

If a company breaches its articles of association, there are legal remedies available depending on the nature of the breach and whether the company or individual shareholders can take action. Personal actions are limited to enforcing membership rights.

How much do articles of association cost?

The cost for drafting Articles of Association by a licensed solicitor through Lawhive starts at £459 including VAT. For a personalised free quote based on your circumstances, contact our legal assessment team today.

At Lawhive, we believe legal help should be affordable for everyone so we regularly check our prices to stay competitive.

On average, we’re 30% cheaper than traditional high-street law firms. When you get a quote from us, our prices are fixed and include VAT.