The model articles of association are a default set of documents that establishes a company’s constitution, specifying the internal rules and regulations that must be followed at all times by the company’s members and directors. Every private and public company formed in England and Wales, Scotland, and Northern Ireland is legally required to have articles at the time of incorporation.
The model articles were introduced on 1 October 2009, replacing ‘Table A’ as the default set of articles for UK limited companies incorporated on or after that date. Governed by the Companies Act 2006 and provided by Companies House under the The Companies (Model Articles) Regulations 2008, three versions of the ‘model articles’ are available for the three different limited company structures in the UK:
- Private companies limited by shares
- Private companies limited by guarantee
- Public limited companies (PLC)
Model articles automatically apply to every UK company upon incorporation, unless the company chooses to adopt altered or bespoke articles instead. They provide an ideal foundation and are most appropriate to small companies where there is limited risk of disputes between shareholders and directors. However, it is possible to tailor certain provisions in the model articles, or create entirely new articles, at any time after incorporation to meet the changing needs of the business.
What is included in the model articles of association?
The provisions included in the model articles of association broadly cover five essential areas (where applicable):
- Liability of members – Financial liability of shareholders or guarantors is limited to the fixed nominal value of their shares or guarantees
- Directors – Powers and responsibilities, procedures for decision making, appointment and termination, remuneration and expenses
- Shares and distributions – Paying for shares, rights attached to shares, allotment and transfers of shares, payment of dividends and other distributions
- Decision-making by members – Organisation of general meetings, voting at general meetings, additional decision-making options
- Administrative arrangements – Permitted forms of company communication, company seal, inspection of company records, directors’ indemnity and insurance
Can I use model articles for a company with one director / shareholder?
Private limited companies can be set up with just one director who is also the sole shareholder, which is very common. The model articles, therefore, can be used by a company that has only one director and shareholder, despite the ambiguity of Model Article 11(2) which states:
“The quorum for directors’ meetings may be fixed from time to time by a decision of the directors, but it must never be less than two, and unless otherwise fixed it is two.”
Naturally, having a minimum of two directors at a general meeting would be impossible in a company that has only one director. To fully understand this provision, it should be read in conjunction with Article 7(2), which states:
- the company only has one director, and
- no provision of the articles requires it to have more than one director,
the general rule does not apply, and the director may take decisions without regard to any of the provisions of the articles relating to directors’ decision-making.”
The provision for a quorum of two directors for meetings only applies to companies with two or more directors.
When are model articles not suitable?
Whilst a great starting point for many new companies, the standardised model articles will not suit everyone from the outset. It may be necessary to alter the model articles or adopt bespoke articles before or after incorporation when:
- Issuing multiple share classes or any class of share other than Ordinary
- Providing the option to allot shares as unpaid, partly paid, or fully paid
- There will be alternate directors
- Restricting directors’ powers
- Granting additional powers to directors
- Including restrictions on the transfer of shares
- Requiring a private limited company to hold annual general meetings
- Giving notices and holding meetings by electronic means
- Removing conflict provisions that prevent directors from voting if they have a conflict of interest
Changing the model articles
No two companies are the same, and businesses evolve over time, which necessitates the need for some companies to add or remove provisions in their articles, change the wording of certain provisions, or create an entirely new set of articles that better suits the needs of the business at a particular point in time.
Provided any changes made to the model articles are in accordance with company law, members can agree to change the articles of association by passing a special resolution at a general meeting or in writing. This type of decision requires a majority vote of at least 75% of shareholder votes.
If a company changes its articles, a copy of the new articles and the members’ resolution must be delivered to Companies House within 15 days of any change being agreed. If a company is reverting back to the model articles, there is no need to send a copy of the articles, but Companies House must still be informed of the change and provided with a copy of the resolution.
Should any provisions in the articles be inconsistent with the Companies Act 2006, the model articles will override those particular provisions. Similarly, if altered or bespoke articles are silent about certain matters, a default application of the model articles will apply to cover such matters.
Where do I get articles of association for my company?
You will normally receive articles of association by email or post after your company has been incorporated, depending on the method of incorporation chosen.
Companies House provides model articles of association only, so you will have to provide your own if you want to adopt modified or bespoke articles. Furthermore, you can only use the online incorporation service at Companies House to register a company with model articles – all other incorporations must be submitted by post, which is more expensive and takes at least 8-10 days to process.
Alternatively, you can set up any type of company online through Quality Company Formations using our wide range of affordable and specialist incorporation packages, including private companies limited by shares and private companies limited by guarantee.
All company formation applications are approved by Companies House, usually within 3-6 working hours. You will then receive a digital copy of your chosen articles of association by email, along with your certificate of incorporation and other company formation documents.