In England & Wales, every limited company is required to establish and uphold Articles of Association, which serve as a set of regulations dictating the operation of the company. Essentially, the Articles of Association constitute a company’s foundational constitution.
The Articles govern the internal affairs and policies of a company, effectively forming a legal contract binding upon each member of a company and between the members and the company itself.
Key components typically found in Articles of Association include:
- Shareholders’ Rights and Responsibilities: Detailing their rights and obligations within the company.
- Directors’ Rights and Responsibilities: Outlining the roles, powers, and duties of company directors.
- Share Capital and Distributions: Specifying rules regarding share capital, issuance of shares and distribution of profits.
- Decision-Making Procedures: Establishing protocols for decision-making processes involving both shareholders and directors.
- Administrative Arrangements: Addressing administrative matters such as meetings, voting procedures and record-keeping.
It’s important to note that Articles of Association are a public document, registered with the Registrar of Companies and accessible through Companies House. Therefore, certain sensitive commercial provisions may be more suitably included in a Shareholders Agreement – a confidential agreement between the company and its shareholders.
Furthermore, Articles of Association are not static; they can and should be amended as necessary to align with evolving legal requirements and changes in the company’s operations and personnel. Any amendments must adhere to the provisions set forth in the Companies Act 2006 and the existing Articles of Association.
A failure to comply with filing regulations, and the provisions within the Articles themselves, can result in both criminal and civil penalties.
Should you require further information or assistance on any other corporate topics, please feel free to contact Jade Langford in Company Commercial team on 01384 445 971 or by emailing jadelangford@talbotslaw.co.uk