This is a copy of the 'model' Articles of Association commonly used when setting up a limited liability company in the UK.
What are Articles of Association?
The Articles of Association is a legal document that sets out the rules of how a company will be run and is one of the documents needed to set up a private limited liability company in the UK.
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.
A 'model' set of rules is provided in The Companies (Model Articles) Regulations 2008 and can be adopted 'as is' or amended to form bespoke Articles of Association. The model Articles are not suitable for companies wishing to register as a charity nor for companies wishing to omit the word "limited" from the company name.
If you are incorporating a company limited by shares by post and intend to adopt the model Articles without any changes then you do not need to provide a printed copy of the model Articles with your completed IN01. You will, however, need to included a printed and completed Memorandum of Association.
These Articles of Association templates are also available from the Companies House website. We provide it here, as a formatted Word document, to make it easy to edit when creating amended Articles.
Articles for Companies limited by shares
A company limited by shares is the type of company commonly used for forming a small business. These 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.
The model Articles for companies limited by shares include clauses covering:
- Directors' powers and responsibilities
- Appointment of directors
- Shares and distributions, including the issuing of shares and the different voting rights attached to different classes of shares
- Payment of dividends and other distributions
- Capitalisation of profits
- Decision-making of shareholders
- General meeting;
- Voting at general meetings
- Administrative arrangements
- Directors' indemnity.