Articles of Association, act as a guide or 'rule-book' which outline how a company is run. The Articles provide a contract between the company itself and the shareholders, outlining their capacity and role as shareholders.
If you believe your Articles of Association are outdated or require further information, our corporate team would be more than happy to assist you. Please contact us at email@example.com or call us on 029 2009 5500 to speak to one of our team. Alternatively, please submit a quote through our website at greenawayscott.com/get-a-quote.
Ramifications for not having Articles of Association
According to the Law of England and Wales, every company formed must have Articles of Association. Without such Articles a Company is not legally formed. Companies limited by shares that have been incorporated before 1 October 2009 are likely to have adopted previous legislation referred to as 'Table A' Articles. Any companies incorporated after 1st October 2009 are likely to have implemented the more up-to-date 'model articles' relevant in current legislation.
Does your company need to update its Articles?
The Companies Act 2006 brought in significant changes to how shareholders and directors can manage a company. Those companies incorporated prior to October 1st 2009 should note that the old approach containing the memorandum has been abolished. Companies should be aware that under the new legislation a company is authorised to do whatever business it is intended to do, there is therefore no longer an obligation to limit the company's activities.
As an example of the dated 'Table A' Articles, companies should be aware that this historical text does not recognise that 'electronic communication' is acceptable form of communication...a true indication that your company needs to get with the times. Directors and shareholders will also realise that contained within the new legislation there is no longer a requirement to elude to the authorised capital of the company, a very attractive article for business owners and directors.
These are just some of the key indicators that an update to your company's Articles of Association should be seriously considered.
How to update your Articles of Association
Firstly a review of the current articles should be undertaken. Following which, a shareholder's meeting can be held to ensure the passing of a special resolution in order to amend company articles. For this process to take effect, 75% of those authorised to vote, must vote in favour of any alterations to the articles. Amended articles must be filed to the Companies House within 15 days of the resolution being passed.
The information contained in this article is for information purposes only and is not intended to constitute legal advice.