UK registered companies have a constitutional document called the Articles of Association. This document sets out the purpose of the company and provides the rules on how the company will operate.
Most new company formations adopt model articles, as set out by The Companies Act 2006. Alternatively, you may have a set of bespoke articles created for you or accept a version provided by a company formation agent.
Typical articles of association include-
- Director’s powers and decision making
- Appointing and removing directors
- Meetings and procedures
- Distribution of profit
- Shares and transfer of shares
- Administrative matters and indemnity
At any time during life span of the limited company you are able to amend or entirely replace the articles of association. You can do this directly with Companies House or your formation agent can help you. For more complex changes you may need to engage a solicitor to re-write the documents.
Changes should only be made where a legitimate reason is present, for example a restriction or clause is no longer necessary or prohibitive to the expansion of the company. One common change to the articles of association is the introduction or pre-emption rights. The basic model articles do not include pre-emption rights which provide some protection to shareholders.
When a legitimate need to change the articles of association has been identified, the change can be implemented in different ways
- Amending the wording of one or more clauses
- Adding or removing clauses
- Adopting a new set of articles replacing the previous document
If you have many changes to be made, it is often easier to amend the complete document and submit a new set of articles of association to Companies House.
How you submit the changes will depend upon the structure of your company. If you are a sole director or have very few shareholders this is quite straight forward and you can draw up a simple written resolution yourself or contact Simple Formations for assistance.
Companies with larger structures and multiple shareholders may require a special resolution to be drafted recording the action. This can be passed at a meeting such as the AGM and passed by a majority, subject to your existing articles requirements.
Once completed the signed resolution should be sent along with the updated or replacement document to Companies House. It is recommended that you monitor Companies House online to check that the document has been accepted. You will not receive confirmation from Companies House and most submissions are processed in approximately two weeks.