What are articles of association?

When a company is registered you need the following documents:

• A ‘memorandum of association’, which is a legal statement signed by all initial shareholders in which they agree to form the company.

• ‘Articles of association’ is a legal document containing the written regulations (agreed by the shareholders, directors and the company’s secretary) setting out the way in which a company will be governed. It takes care of matters such as shareholder rights, appointment of directors, general meetings etc.

The Companies Act 2006 has introduced a new model set of Articles of Association with small businesses in mind. The purpose of this document is to make it simpler for the directors to run the business on behalf of the shareholders.

A company limited by shares can choose whether to:

• adopt the model articles in whole or in part as its own articles of association;
• adopt the model articles with modifications; or
• adopt their own articles.