Are your Articles of Association fit for purpose?
A company’s Articles of Association (Articles) is the company constitution setting out the internal management of the company. The Articles commonly cover, how directors are to make decisions and the proceedings at a meeting of the directors; share transfers and dividend payments; voting rights of members and member meetings, amongst other issues. Every company is required to have a form of Articles upon incorporation; a company can adopt the appropriate Model Articles or prepare bespoke Articles.
We have seen a rise in queries lately where a resolution has been hindered by out of date Articles. Whilst there is no obligation to keep your Articles up to date, there are of course many benefits.
Companies incorporated under the Companies Act 1985 will likely be subject to the Table A provisions or a variation thereof. Many of these provisions are now out of date and in extreme cases may be incompetent and unenforceable; there is therefore no reason or advantage to retaining these provisions.
Company law has come a long way since the Companies Act 1985 with regard to electronic communication, proxy rights, the abolishment of authorised share capital, amendments to notice periods, the requirement to hold an AGM and the requirement to have a company secretary, to name a few.
Updating your Articles can bring your company up to date with recent legislation, cover more foreseeable issues in this commercial climate and allow your company to take advantage of the current statutory regime.
It is appreciated that reviewing your Articles is an admin task which many may not consider urgent therefore; we would be happy to review your company’s Articles, make some suggested changes and discuss these with you. Please do not hesitate to get in touch with Kirstin Ejsmont in the first instance on 01224 632464 or at email@example.com if your company could benefit from such a review or you have any other general business related queries.