What Are Articles of Association?

For an overview of different business types in the UK, see Business Structures.

The articles of association are the primary constitutional document of a UK company. They set out the rules for how the company is governed, how decisions are made, and the rights and responsibilities of directors and shareholders. Every company registered with Companies House must have articles of association.

Together with the memorandum of association, the articles form the company constitution under section 17 of the Companies Act 2006.

What Do Articles of Association Cover?

The articles of association typically address the following areas:

Directors

• Appointment and removal of directors
• Directors’ powers and duties
• Number of directors required
• Procedures for board meetings, including quorum, notice and voting
• Directors’ authority to make decisions on behalf of the company
• Delegation of powers to committees or individual directors
• Conflicts of interest and how they are managed

Shareholders

• Rights attaching to shares, including voting, dividend and capital rights
• Transfer and transmission of shares
• Pre-emption rights on share transfers
• Procedures for general meetings (AGMs and EGMs)
• Voting procedures, including polls and proxies
• Rights of different share classes (ordinary, preference etc.)

Administrative Matters

• The company’s registered office — see What is a Registered Office?
• Company secretary (if appointed)
• Use of the company seal (optional)
• Indemnity provisions for directors
• Communication procedures between the company, directors and shareholders
• Accounting and financial reporting obligations

Model Articles

Companies that do not adopt bespoke articles will be governed by the model articles prescribed by the Companies (Model Articles) Regulations 2008. There are three sets of model articles:

Using Model Articles

When registering a new company, the founders can:

1. Adopt the model articles in full — the simplest option, suitable for straightforward businesses
2. Adopt the model articles with modifications — the most common approach, tailoring specific provisions to the company’s needs
3. Draft entirely bespoke articles — appropriate for complex businesses with specific governance requirements

If no articles are registered on incorporation, the relevant model articles apply automatically by default.

Key Provisions in Model Articles for Private Companies

The model articles for a private company limited by shares contain provisions on:

• Directors’ general authority to manage the company’s business (article 3)
• Shareholders’ reserve power to direct the directors by special resolution (article 4)
• Directors’ power to delegate (article 5)
• Calling and conducting board meetings (articles 7-16)
• Appointment and removal of directors (articles 17-20)
• Shares including allotment, transfer and transmission (articles 21-27)
• Dividends and distributions (articles 30-35)
• Decision-making by shareholders (written resolutions or general meetings)

How Articles Differ from a Shareholders’ Agreement

Both documents govern the relationship between shareholders and the company, but they serve different purposes:

Many companies have both documents. The articles handle the formal governance framework, while the shareholders’ agreement deals with commercially sensitive matters such as drag-along and tag-along rights, restrictive covenants, deadlock provisions and exit mechanisms.

Conflicts Between Articles and Shareholders’ Agreements

If the articles and shareholders’ agreement conflict, the shareholders’ agreement generally prevails between the parties who signed it. However, the articles remain binding on any shareholders who are not party to the agreement and on the company itself.

Amending the Articles

The articles can be amended by passing a special resolution at a general meeting or by written resolution. A special resolution requires:

• 75% of the votes cast at a general meeting, or
• 75% of the total voting rights for a written resolution

Procedure for Amendment

1. Draft the proposed amendments with legal advice if the changes are significant
2. Give proper notice of the resolution to shareholders (14 days for private companies)
3. Pass the special resolution at a general meeting or by written resolution
4. File the amended articles with Companies House within 15 days of the resolution, along with a copy of the resolution itself

Restrictions on Amendment

Not all amendments are permitted without additional consent:

• An amendment that varies class rights requires consent from holders of that class (s.630-635 Companies Act 2006)
• An amendment that increases a member’s liability requires that member’s written consent (s.25)
• Articles cannot be amended to override a court order or statutory provision
• The memorandum of association provisions deemed part of the articles can only be amended with permission from all members

Entrenched Provisions

Section 22 of the Companies Act 2006 allows companies to include entrenched provisions in their articles. An entrenched provision can only be amended or removed if conditions are met that are more restrictive than a special resolution — for example, requiring unanimous consent of all shareholders.

Entrenchment is useful for protecting fundamental governance rights, such as:

• Veto rights for minority shareholders
• Restrictions on the removal of founder directors
• Requirements for specific board composition

Companies House must be notified if articles contain entrenched provisions.

Common Tailored Provisions

Many companies modify the model articles to include provisions specific to their circumstances:

Pre-emption Rights on Share Transfers

The articles may require a shareholder who wishes to sell their shares to first offer them to existing shareholders before selling to an outside party. This protects existing shareholders from unwanted new members.

Drag-Along and Tag-Along Rights

• Drag-along: allows a majority shareholder to force minority shareholders to sell in a trade sale
• Tag-along: allows a minority shareholder to join a sale if the majority shareholder sells

These are more commonly found in shareholders’ agreements but can also be included in the articles.

Weighted Voting Rights

The articles can create shares with different voting rights, allowing certain shareholders greater control. For example, founder shares may carry ten votes per share, while ordinary shares carry one vote.

Director Appointment Rights

Certain shareholders may be given the right to appoint a director to the board, ensuring representation at the governance level.

Dividend Provisions

The articles may specify how dividends are declared and distributed, including:

• Whether the directors or shareholders have the power to declare dividends
• Whether different share classes have preferential dividend rights
• The timing and method of payment

Articles for Different Company Types

Private Limited Company (Ltd)

Most private limited companies use the model articles with targeted modifications. The articles will typically address share transfers, director appointment and the balance of power between directors and shareholders.

Community Interest Company (CIC)

A CIC must include specific provisions mandated by the CIC Regulations 2005, including the asset lock, restrictions on dividends and provisions for distribution of assets on winding up.

Limited Liability Partnership

An LLP does not have articles of association. Instead, its internal governance is regulated by a members’ agreement (also called an LLP agreement).

Related Concepts

• Memorandum of association — the complementary formation document
• Shareholders’ agreement — a private contract supplementing the articles
• Director duties — obligations framed by the articles
• Companies House — where articles are filed and publicly available
• Confirmation statement — annual filing confirming company details