A company must register articles unless the (new) model articles (i.e. replacement for Table A) apply. The articles must be in a single document and must be divided into numbered paragraphs. Model articles for the different types of companies are still to be specified in regulations (sec. 19), and the drafts are still subject to consultation. As with the old Table A, the model articles apply except to the extent that they are excluded or replaced by actual articles (sec. 20). Articles can be altered by special resolution (sec. 21).
The Companies (Model Articles) Regulations 2008, made under the Companies Act 2006, prescribe model articles for the three most common types of company: -
Other types of company to those listed above are relatively rare and often have very specific needs that do not justify a standardised approach, but they can use the model articles as a guide to prepare bespoke articles.
The new model articles: -
In the case of articles for private companies, the approach has been to 'think small first'. The result is sets of model articles that are more accessible to the directors and members of small companies.
Companies should always ensure that they govern themselves according to the general provisions of company law as well as the provisions of their articles.
If the company's members decide to draw up their own rules, they should consider whether they need to take legal or other professional advice and have 'bespoke' or 'tailor-made' articles drawn up for their company.
Articles can also be purchased from law/legal stationers and from formation agents.
The articles may contain provisions that may be amended or repealed only if conditions are met, or procedures are complied with, that are more restrictive than passing a special resolution (e.g. that, say, these particular provisions require the consent of all the members, or 90%, etc.). Entrenched provisions can only be included in the articles on incorporation or with the consent of all members, and they can always be amended by agreement of all the members, or by court order (sec. 22). Entrenched provisions, or their amendment, must be notified to Companies House (sec. 23). If a company that has entrenched provisions in articles amends the articles in any way, it must register a notice of compliance with the entrenchment provisions when it notifies Companies House of the amendment (sec. 24).
The Companies (Model Articles) Regulations 2008 apply to companies formed under the Companies Act 2006 who choose to adopt them and apply by default to companies formed under that Act that do not register articles of association of their own with the Registrar of companies. These articles apply to new companies formed on or after 1 October 2009.
All companies which choose not to adopt the relevant model articles in their entirety will have to provide a copy of their bespoke articles and, in doing so, may incorporate model articles by reference, including provisions from a version of model articles which is not their own default version of the model articles (e.g. companies incorporated under the Companies Act 1985 may amend their articles so that they cross-refer to the new model articles).
Private companies limited by shares may either adopt the public company model articles in their entirety on incorporation or produce bespoke articles which incorporate provisions of the public company model articles by reference.
In general a company can change its articles by special resolution (i.e. a vote passed by three-quarters of those participating). If a company’s articles contain restrictions on making changes so that specified articles can be changed only if conditions are met or procedures are complied with that are more restrictive than those for a special resolution, then those articles contain provision for entrenchment.
For companies formed under the Companies Act 2006, any provisions in the articles that cannot be changed by special resolution can be changed by unanimous agreement of the members of the company. This is the effect of section 22(3)(a).
Companies formed under the Companies Act 1985, or earlier legislation, may have entrenched provisions that can be amended only with something more than or different from a unanimous agreement of the members, such as the agreement of a third party, or may simply not allow of amendment under any circumstances. Such entrenchments in pre-existing companies will continue to be effective, under transitional provisions in paragraph 4(2) of Schedule 2 to the Companies Act 2006.
We do not use a sample of the articles of association provided by the Companies House; our standard version of the articles of association is very widely drawn, and is suitable for most types of business. Our articles of association have been drafted by solicitors specialising in the relevant area.