Bespoke Articles of Association

The Companies Act 2006 requires every company to have articles of association in place, setting out how the business is run and what powers its directors have. The model articles that most companies adopt work fine in many cases, but not every business fits the standard template.

Recent case law has left real uncertainty over how the model articles apply if your company has only one director, for example. We always recommend amending the articles, or checking they’re already amended, so a sole director can make decisions alone, count as a quorum (the minimum number of people needed at a meeting for decisions to be valid) on their own, and ratify past decisions properly under company law.

Bespoke articles tend to matter most where a company has a sole director, multiple shareholders, different classes of shares, external investors, family ownership, or particular arrangements around succession and decision-making. They let the company’s constitution reflect how the business actually operates, rather than relying on the generic default. The model articles are a useful starting point, but they don’t always deal adequately with the practical needs of a company, its directors or its shareholders. They can also work in circumstances where a minority shareholder will not sign a shareholders agreement, so the majority shareholders can exercise their rights to ensure the articles of association cover off some of the key issues which would ordinarily be in a shareholders agreement.

What bespoke articles can cover

• Appointing and removing directors
• Quorum requirements
• Voting rights
• Issuing and transferring shares
• Dividend arrangements
• Conflicts of interest
• What happens if a shareholder dies, leaves, or wants to sell their shares

How they protect you

• Pre-emption rights
• Drag-along and tag-along provisions
• Restrictions on transfers to unsuitable third parties
• Enhanced consent requirements for key decisions
• Mechanisms for resolving deadlock or disputes

These protections matter most where there’s more than one shareholder, where investors are involved, or where the business is expected to grow.

Bespoke articles won’t stop every disagreement, but they decide in advance how one gets resolved.