Summary
- A company must pass a special resolution to amend its articles of association.
- The Companies Act 2006 protects the 75% threshold and prevents articles from removing key shareholder rights.
- Directors must follow the company’s articles and any shareholders’ agreement, then file the resolution and amended articles with Companies House.
- This guide explains how UK business owners and company directors can change articles of association and update company governance.
- LegalVision’s business structuring lawyers advise UK businesses on drafting articles, aligning shareholder rights and managing special resolutions.
Tips for Businesses
Compare the proposed wording with the current articles and any shareholders’ agreement. Decide whether a general meeting or written resolution suits the shareholder group. Check the voting test, notice requirements and resolution wording before approval. After the vote, update the company’s records and file the required documents with Companies House within 15 days. Speak to a corporate lawyer at LegalVision about drafting and implementing amended articles.
A UK company can change its articles of association by passing a special resolution with at least 75% shareholder approval. The Companies Act 2006 and the company’s own constitutional documents set limits on that process. Companies must protect statutory shareholder rights, follow any consent requirements in a shareholders’ agreement and file the resolution and amended articles with Companies House. Private companies may use a written resolution instead of a general meeting, but the voting test differs. Careful drafting helps directors align governance rules with the company’s ownership, share structure and commercial plans. This article explains when to change a company’s articles, how to choose between written resolutions and meetings, and how to complete the filing process.
What Are Articles of Association?
All companies must have articles of association. Articles typically take three main forms:
- unamended model articles of association;
- amended model articles of association; and
- bespoke (tailored) articles of association.
The Model Articles are generic articles that apply by default (under the Companies Act 2006), and set out basic rules governing the company. Small companies may seek to rely on these.
Larger companies and those incorporated with legal assistance may adopt bespoke articles suited to their particular needs and objectives. Bespoke articles are valuable for companies with complex ownership structures, multiple share classes, or specific governance requirements that standard model articles cannot adequately address. They allow provisions for the following:
- drag-along and tag-along rights;
- pre-emption rights on share transfers; and
- detailed decision-making procedures.
When Should I Change My Company’s Articles?
Articles of association can be amended where existing provisions restrict the company or its directors from taking desired actions.
Model Article 14 is another frequent target for amendment. In its unamended form, a director with an interest in a matter before the board cannot vote without shareholder approval by ordinary resolution. For small companies where directors and shareholders are the same individuals, this is often impractical, and the article is commonly amended or disapproved accordingly.
Articles should also be reviewed and amended ahead of significant structural changes, including:
- investment rounds;
- mergers; or
- acquisitions.
Investment transactions frequently require bespoke provisions such as:
- investor veto rights;
- board composition requirements; and
- exit mechanisms.
Other common reasons for amendment include:
- creating new share classes with special rights;
- establishing employee share schemes;
- implementing dividend policies; and
- introducing shareholder dispute resolution mechanisms.
“Changing articles is not a paperwork exercise. The wording must reflect how the company actually makes decisions, because a small drafting error can create conflict between directors, shareholders and different share classes. Businesses should check related shareholder agreements before they put a resolution to a vote”
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What Limits Are There on Changing My Company’s Articles?
A company is generally free to amend its articles as it sees fit, subject to following requirements in the Companies Act and any consents or processes set out in the company’s articles of association or shareholders agreement
However, there are certain matters that company law prevents a company’s articles from interfering with. For example, a company cannot amend its articles in any way that interferes with the:
- power of shareholders to change articles by special resolution;
- power of shareholders to pass written resolutions; or
- the statutory threshold for removing directors.
Amendments to a company’s articles must be passed by special resolution, requiring at least 75% of eligible votes cast in favour. This threshold cannot be lowered, and directors cannot be granted unilateral power to amend the articles. Any provision attempting to circumvent these requirements has no legal effect.
What is the Process for Changing My Company’s Articles?
Shareholders must pass a special resolution to change the company’s articles. Both shareholders and directors can propose resolutions to amend articles. As directors more commonly propose resolutions, below is a generic procedure for amending a company’s articles.
Below is the general procedure to follow:
Step 1: Board Meeting
The directors must convene a board meeting with appropriate notice. The directors must obtain a quorum to approve proposing a resolution to the shareholders to amend the company’s articles.
Step 2: Board Approval
At the meeting, the board must agree to the resolution’s wording for presentation to the shareholders. This typically requires a simple majority of the board, though your company’s articles may specify otherwise.
Step 3: Shareholder Resolution
The board must vote to convene a shareholders’ meeting by giving appropriate notice. Alternatively, they can propose the amendment via written resolution, which does not require a general meeting.
The shareholders must pass the resolution by special resolution, requiring at least 75% of eligible votes in favour. Directors must comply with proper procedures for giving notice of the meeting or circulating the written resolution.
Step 4: Implementation and Filing
If the shareholders pass the resolution with at least 75% of votes, the directors should convene a second board meeting to formally adopt the amended articles. They should also arrange to send the relevant documents to Companies House to comply with reporting obligations. These documents include a copy of the special resolution and, where appropriate, a copy of the amended articles.
This template helps you document important and major decisions or actions reached in board meetings.
Written Resolutions or General Meetings?
Private companies can often choose between a general meeting and a written resolution when shareholders approve changes to their articles. The choice affects how the company measures the 75% threshold.
At a general meeting, the company counts only votes that shareholders cast at the meeting. A shareholder who does not attend or vote does not add to that total. A written resolution uses a different test. Members holding at least 75% of the total voting rights of eligible members must approve the resolution. A silent shareholder can prevent the resolution from passing.
The resolution should identify the proposed amendments clearly and state that it seeks approval as a special resolution. Directors must circulate the resolution to every eligible member and follow the company’s articles and any shareholders’ agreement. Private companies cannot use written resolutions for every decision, so directors should check the statutory rules before choosing that route.
A general meeting may work better where shareholders need to discuss complex changes or where one member has stopped responding. A written resolution may offer a simpler process for a closely held company with shareholder participation. For more detail, read how written resolutions work for UK shareholders before preparing the documents.
Key Takeaways
The articles of association govern how the company is managed and specify which matters require shareholder approval. Given their fundamental importance, companies may periodically wish to change their articles. All amendments require approval by at least 75% of eligible shareholders via special resolution. Companies must comply with formal requirements when proposing and passing resolutions to amend articles.
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Frequently Asked Questions
What are a company’s articles of association?
A company’s articles of association set rules for its internal management, shareholder rights and decision-making. The document forms part of the company’s constitution and binds the company and its members.
Where can I find a company’s articles of association?
You can search for a UK company on Companies House and download its filed articles of association from the company’s public record.
How long does it take to change a company’s articles of association?
The process usually takes two to four weeks from the first board meeting to filing the amended articles. Simple changes may take less time, while complex amendments may take longer.
Can a company operate without articles of association?
No. Every UK company must have articles of association. When a company does not register bespoke articles, the relevant model articles apply by default under the Companies Act 2006.
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