Articles of association set out the basic management structure of the company. They can be inspected by the public at Companies House (www.companieshouse.gov.uk).
Matters governed by the articles include:
- Powers and proceedings of directors
- Quorum for both board and shareholder meetins
- Share capital, share classes, rights attached to shares, transfer and transmission of shares and any pre-emption rights that may be provided
- Details of the chairman’s casting vote (if applicable)
- Notice requirements etc
Under the Companies Act 1985 the articles must be signed and witnessed by each subscriber to the memorandum (section 7(3)) and any shareholder who requests a copy of the articles (or memorandum) must be provided with them (section 19).
The articles themselves bind the company and its members (despite the fact that they will not have all signed them) as a result members have both contractual and statutory remedies available for any breach of the articles that may occur. In some instances companies need to alter their articles, this can be done by passing a special resolution at a general meeting (section 9). Just like on incorporation the company must then submit the amended articles to the Registrar of Companies and provide copies to any member who requests the same.
If you have any experience with companies it is likely that you will have come across ‘Table A’. Table A is a set of model articles that can be adopted by a company, doing so removes the need of filing with the Registrat of Companies (although you still need to write to them explaining that you are using Table A). Often companies use Table A as the base to their articles and then have a number of custom drafted provisions in order to tailor the articles to their format. As a result of the changes in the various Companies Act’s it is important to check which version of Table A applies to a particular company.
This article is just one in a series of commercial law articles, please keep checking back to the Reading Room for updates.