Registers, Records & Documents 5 Min Read
Last updated: 5 May 2024The articles of association regulate the internal workings of a company and must be complied with at all times. However, this governing document is not set in stone. To reflect the changing needs of a business, it is possible to amend a company’s articles of association at any point after incorporation.
Whether you want to change certain wording, add or remove specific provisions, or replace your existing articles of association with an entirely new set of bespoke articles, you will need to obtain the approval of members (shareholders/guarantors) and notify Companies House of the changes.
As per section 283 of the Companies Act 2006, you can amend a company’s articles of association by passing a special resolution of the members, provided there is a legitimate reason for making such changes. This type of resolution requires a majority of at least 75% of the total votes and it can be passed in one of two ways:
A written resolution is often the quickest and most convenient option for smaller companies because there is no need to arrange and attend a general meeting, which can be time-consuming. Each member will simply be provided with a copy of the updated articles to review. If they are happy with the changes, they will provide their approval by signing the resolution.
A copy of the special resolution should be delivered to Companies House within 15 days of being passed, together with a copy of the new articles of association.
When a written resolution is unsuitable, which is often the case when companies have multiple members, you can amend a company’s articles of association by passing a special resolution at a general meeting. There are a number of steps required to pass a special resolution in this way:
Whether the company chooses to distribute a written resolution or call a general meeting to change the articles of association, the amended articles will take effect as soon as the special resolution has been passed.
It should be noted that, in some limited circumstances, a company may have parts of its articles that are ‘entrenched’. These entrenched sections can only be amended through a percentage higher than the standard 75% – often this will be set at 100%, i.e., by unanimous agreement of the company’s members. If any sections of the company’s articles are entrenched, they will need to attain this higher percentage to be able to modify them.
There are many reasons why you may want or need to amend a company’s articles of association, ranging from internal management requirements to changes in legislation. Most UK companies adopt the default Model articles when they are incorporated at Companies House. This standardised set of articles provides a suitable foundation for many companies when they are starting out. Over time, however, it may be beneficial or necessary to alter certain provisions or create bespoke articles to suit the particular needs of your company as it grows.
Table A is the earlier default form of articles used by limited companies incorporated before 1 October 2009 under the Companies Act 1985. These articles contain a lot of legalese and are quite restrictive and complex. Therefore, many older companies chose to replace Table A articles with the newer Model articles.
Prescribed by the Companies Act 2006, the Model articles were introduced to ease the company formation process and minimise the administrative burden placed on companies. Aside from being consistent with current company law, the provisions in the Model articles offer greater flexibility and are much easier to amend.
Companies with more than one shareholder can benefit from including specific provisions in their articles that restrict share transfers, including pre-emption rights, permitted transfers, compulsory transfer clauses, drag-along rights, and cross-option agreements.
These types of provisions will provide better protection to shareholders, minimise internal disruption, prevent hostile takeovers, and ensure that clear procedures are in place for a range of eventualities, such as resignation, retirement, or the death of a shareholder.
Whilst having only one share class may be easier to manage, it is not a practical option for all companies. The Model articles do not support multiple share classes. Therefore, if you wish to issue any class of share other than ‘Ordinary’, you will need to alter your articles of association accordingly.
Authorised share capital is a provision that restricts the number and value of shares that a company can issue. Previously a statutory requirement under the Companies Act 1985 and Table A articles, the requirement for an authorised share capital was abolished on 1 October 2009 when the Companies Act 2006 came into force. Companies formed under the old Act retain the authorised share capital unless they choose to remove it, making use of the fact it is no longer compulsory.
Conversely, companies formed following the introduction of the 2006 Act might choose to voluntarily insert a provision of authorised share capital into their articles by making the necessary amendments.
Under the Model articles of association, there is no requirement for private companies to appoint a company secretary or hold annual general meetings. The articles also prescribe strict rules on the decision-making powers of directors, the voting rights of shareholders, the required percentage of votes to pass a resolution, the payment of dividends, the appointment and removal of directors, and many other administrative arrangements that impact how a company can operate.
If you find that any provisions in the Model articles are restrictive or unsuitable for the particular needs of your company, it would be beneficial to tailor them accordingly.
It is good practice to review your company’s articles of association on a regular basis to ensure the provisions are appropriate for the business, protect the rights and interests of all shareholders, and remain consistent with the company’s evolving corporate structure and governance.
Articles that are fit for purpose will help you to manage your company effectively and avoid disputes and invalid decisions. However, before making any changes to your articles, we recommend seeking professional legal advice from a specialist business solicitor.
If you want to amend a company’s articles of association, Quality Company Formations can provide you with all of the backing documentation you need, including a Special Resolution and Board Minutes, to get your new articles adopted. Speak to us today by calling 020 3984 5389 or email cosec@qualityformations.co.uk
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Nicholas is Director, Company Secretarial at QCF, responsible for completing the company’s statutory filings and ensuring all the company secretarial department is fully trained on company law and company secretarial procedures. Nick is also Company Secretary for the BSQ Group and all subsidiary brands, an accredited industry leader and a Companies Act 2006 specialist.
I am looking for urgent guidance, I am a fellow director of CIC company and we are looking to amend its aims and objectives. There are 2 directors including myself. We set the CIC as a social enterprise back in 2021 but our mission since that time has changed, what are the steps in making the amendments for a CIC company? Thank you in advance.
QCF Team says:Hi Harry, Thanks for your message. There are 2 things you need to do in order to change the objectives of a Community Interest Company. 1. Complete the form CIC34 detailing your new activities, together with how they benefit the local community
2. Amend your articles of association to detail the new objects by having your members (shareholders or guarantors) pass a special resolution (note that at least 75% of the eligible votes need to be cast in favour of the resolution for it to pass). Send a copy of your complete form CIC34, together with the new articles and the accompanying special resolution to the CIC Regulator. The Regulator will need to approve the change to your objects.
We hope this helps! Kind regards,
The QCF Team
Hi
The lease to the 4 flats in our building contain a single clause referring to repairing obligations . The freeholder who is the four owners disagree with one another as to the correct interpretation of this clause. This is because , as one director of the Ltd company , one individual is requiring the 3 others to share payment for replacing the widow frames of his recently acquired apartment . Historically we have repaired our own . This individual director has now stopped paying all contributing bills eg buildings insurance fire alarm maintenance
Can we 3 directors amend the articles of association by vote to clarify the obligation set out in the lease please ?
G Berryman – Smart
QCF Team says:
Thank you for your kind enquiry, Georgina. You mentioned that the three directors of the company wish to amend the company’s articles of association in order to clarify the obligation concerning repairs. It should be noted that the articles of association can only be amended by special resolution of the members (that is, 75% or more of the votes cast in favour of the change by the members of the company) unless of course those particular articles are entrenched or there are other restrictions on making adjustments in place. The directors, in their position alone, do not have the ability to make changes to the company’s articles of association. We trust this information is of use to you. Kind regards,
The QCF Team
Hi, we have Articles of Association for a company limited by guarantee which were written under the Companies Act 1948. It is legally required to update them to reflect the Companies Act 2006, even if the provisions in the original remain fit for purpose?
Many thanks
QCF Team says:
Thank you for your kind enquiry, Rosa. It is not legally required to update your articles of association to reflect the Companies Act 2006; however, it is recommended to update your articles to bring them into line with the latest Companies Act. This would particularly be the case if the articles of associate for your company were written under the Companies Act 1948, as this would mean a few acts would have passed since their last update. We may be able to assist you should you wish to adopt new articles of association. If you want us to take a look and potentially quote for this work, please give our Company Secretarial Team a call on 020 3984 5389. We trust this information is of use to you. Kind regards,
The QCF Team
QCF Team says:
Thanks for your comment, Lyle. We’re glad you found this blog article of use. Kind regards,
The QCF Team
We are about to take over from the developer but in the current articles they have 75% of the voting rights, is it possible to get this removed?
QCF Team says:
Thank you for the question. Can you clarify the shareholding structure of the company, please? For example, does the individual have 75% votes due to having 75% of the shares. Or are there multiple classes with different voting rights? Also, has the developer agreed to transfer shares? Kind regards,
The QCF Team
Hi,
I want to amend the articles of association of a company limited by guarantee. Can you assist me? What is the fee?
QCF Team says:
Thanks for your question Muhammad. We may be able to help but we’ll need a little more information. Can you provide more details about the changes that are required? If you’d rather not post this here, feel free to send it over to info@qualityformations.co.uk. We look forward to hearing from you. Regards,
The QCF Team
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