The Articles of Association are one of a number of documents required to incorporate a UK company. There are two types: one for limited companies with shares, the other for "not for profit" (limited by guarantee) companies.
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The Articles of Association document is one of the legal documents and forms required to incorporate a UK company, as described in Company Formation. We offer Articles of Association templates suitable for use when forming a company limited by shares or when forming a company limited by guarantee.
This Articles of Association template set is suitable for use when registering a private limited company in England and Wales or Scotland. The documents comply with the Companies Act 2006 and are based on the model articles set out in The Companies (Model Articles) Regulations 2008. They are not suitable for companies wishing to register as a charity or for companies wishing to omit the word "limited" from the company name.
All companies are required to adopt Articles of Association (commonly referred to simply as the Articles) when they incorporate. Tables A to F of the Companies (Tables A to F) Regulations 1985 (more commonly known as Table A) set out standard model Articles, which companies can use as the basis for their own Articles. If companies do not register their own Articles of Association, Table A applies by default. Tables A to F were amended to bring them in line with changes brought about by the Companies Act 2006 and the model Articles are now contained in the Companies (Model Articles) Regulations 2008.
The Articles of Association form the basis of a company's constitution and contain details of running the company, internal management affairs and liability. The Articles form a contract between the company and its shareholders or members and set out how the company will make decisions to ensure the smooth running of the company. The shareholders or members have total freedom to decide which rules to include in the Articles, provided that the rules are not against the law. The Articles adopted by a private limited company on incorporation will depend on whether the company is limited by shares or by guarantee.
Companies limited by shares
A company limited by shares is the type of company commonly used for forming a small business. These limited companies will have limited liability i.e. if the company fails there is no claim on the assets of the shareholders (beyond their original investment). The purpose of this type of company is to trade and make profits.
Shares are issued in return for a lump sum investment. Shares represent ownership of a company. If you buy shares in a company you become one of its owners. In a small business this investment may come from friends and family but for businesses looking for capital to fund high growth this funding will come from formal equity finance such as venture capital firms or stock markets. The advantage of issuing shares and raising money in this way is that you don't have to pay the money back or pay interest to the investors. Instead, shareholders are entitled to a share of the distributable profits of the company, known as dividends.
Shareholders appoint directors to run the company (often the same people in a small business) and are involved in making key decisions, such as whether a business should be sold.
Articles for companies limited by shares cover:
A company limited by guarantee is the type of not-for-profit company commonly used to set up a club or an association. Companies limited by guarantee do not have shares and its members are guarantors rather than shareholders. Limitation of liability takes the form of a guarantee from its members to pay a nominal sum in the event of the company being wound up while they are a member or within one year of their ceasing to be a member. The amount of money that is guaranteed can be as little as £1 and is stated within the Company's Articles of Association. The members agree to contribute a membership fee or subscription, normally have equal voting rights and elect a board of directors. Any profits (often known as "surpluses") are not distributed as dividends, but may be used to support the activities for which the club is formed.
Articles for companies limited by guarantee cover:
A business cannot operate as a limited company until it has been incorporated at Companies House using the following documents - Articles of Association, Memorandum of Association and form IN01.
Memorandum of Association
The Memorandum of Association contains limited information compared to the Memorandum that was required prior to 1 October 2009 and no longer restricts what a company is permitted to do. The Companies Act 2006 provides that, unless a company's Articles specifically restrict the objects of a company, its objects are unrestricted.
It is no longer required to state the type of company, the location of its registered office or its authorised share capital in the Memorandum. It simply confirms the subscribers' intention to form a company and become members of that company on formation. For a company to be limited by shares, the Memorandum also provides evidence of the members' agreement to take at least one share each in the company. Information on capital and shareholdings, which was previously contained in the Memorandum prior to the coming into force of the Companies Act 2006, is now contained in the form IN01 as either a 'statement of capital and shareholdings' or a 'statement of guarantee' for those companies limited by guarantee.
Form IN01 contains details of the proposed company name, the location of the registered office address, the company secretary (if one has been appointed) and director(s), the subscriber details and the share capital details.
When you set up a company limited by shares, you can decide on the level of share capital and its division into fixed priced shares. A statement of capital and initial shareholdings must be delivered to Companies House on form IN01 on incorporation of the company. This will set out:
The founders of the company must sign form IN01 and the memorandum of association and state the number of shares they want. These are then issued upon incorporation.
Once the above documents have been submitted to Companies House, a certificate of incorporation will be issued. The certificate is conclusive evidence that the requirements of the Companies Act 2006 as to registration have been complied with and that the company is duly registered under this Act.
These Articles of Assocations templates are suitable for use in the UK and include clauses covering:
They are also included in our Business Annual Subscription (£99 own use) or Full Annual Subscription (£199 own use) - giving you access to wide range of documents, packages and forms for a single annual fee.
If you wish to modify Articles of Association then you may need: Written Resolutions.