Articles of association

Also called Articles, Constitution

A company's internal rulebook, filed publicly. Most companies adopt the standard version without reading it.

What it means

The articles of association set out how a company is run: how directors are appointed and removed, how shares are issued and transferred, how meetings and votes work, and how dividends are declared.

Most new companies adopt the Model Articles, a standard set provided by law. They can be amended or replaced by special resolution.

Why it matters

They are the constitutional layer beneath any shareholders' agreement, and they are public. Where the two conflict, the position is messy — which is why they should be drafted together.

The Model Articles are written for a simple company. They handle a deadlock between two equal shareholders badly, and they say nothing useful about what happens when a founder leaves.

What it looks like in practice

Read them once. If you have more than one shareholder, or any intention of taking investment, have them reviewed alongside a shareholders' agreement.

Common bespoke provisions: pre-emption rights on transfer, different share classes, drag-along and tag-along, and a mechanism for removing a director without deadlock.

What to watch out for

Investors will require changes. Doing it later under time pressure during a funding round is more expensive than doing it early.

Amendments must be filed at Companies House within fifteen days.

Where to get proper advice

A corporate solicitor. This is not a template job once there is more than one shareholder.