Morgan Russell Solicitors

Companies Act 2006 - Articles of Association

From 1st October 2009, the Articles of Association (“articles”) will form the main constitutional document of a company.

Please see the separate briefing note “Companies Act 2006: Memorandum of Association” for details regarding changes to the memorandum.

All companies must have articles.  Model articles have been prescribed and a company has an option to either adopt the model articles, adopt bespoke articles, or a combination of the two.

Table A continues to apply to companies incorporated before 1st October 2009.  An existing company may choose to adopt the new model articles in place of Table A. 

The general rule is that the Companies Act 2006 (“2006 Act”) overrides the company’s articles, subject to a number of exceptions, which are specifically provided for in the Act.

Under the new model articles, there are two key changes:-

  • The director of a company with only one class of share may exercise any power to allot shares.  The director(s) do not need the approval of the shareholders, as is the case now.
  • Pre-emption rights in the 2006 Act apply, unless they are disapplied or varied under the articles.

When incorporating a new company, shareholders need to consider what should be provided for in the articles regarding allotment of shares.

Existing companies are not required to change their articles but it should be something that the directors consider.

A company formed after 1st October 2009 will no longer have an authorised share capital.  Existing companies will be subject to any authorised share capital stated in its memorandum.  If an existing company wishes to allot shares, it should take legal advice as to its situation.  A company can either pass a resolution to remove the authorised share capital or adopt new articles.  In adopting new articles, a company will need to bear in mind the provisions of the memorandum which are deemed included in the articles by virtue of the 2006 Act.

Further information

If you require any further information or assistance, please contact Debbie Turner or Paul Morgan of Morgan Russell on 01372 461411.

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
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