Does My UK Company Need Articles of Association?
Every limited company in the UK must have an Articles of Association before their company registration application.
The Articles of Association is one of the most important needs when applying to incorporate a company and without it, a company cannot proceed with application or registration.
What is an Article of Association?
The Articles of Association is a document only for limited companies. It is a constitutional document that contains the code of conduct, duties and responsibilities of members and also contains the structure of the company. Everybody needs a governing constitution to guide its operations and management.
Companies House must ensure the company has an Articles of Association that is up to the standard before approving the incorporation of any company in the UK. A company might have an article of Association, but if it doesn't meet the standard of the Companies House or does not follow the model Articles of Association of Companies House, it will be rejected.
The Articles of Association contains everything Companies House needs to know about the company you want to incorporate. This includes the business structure, type of business, business activity and also information about the executives of the company including the secretaries if they are present.
According to the Companies Act, 2013, it provides a clear explanation of what the Articles of Association is including the provisions for an Article of Association. Section 2(5) of the Companies Act defines the Articles of Association as a document that contains the rules and regulations governing a company's affairs management.
The Articles of Association must contain the signatures of all the subscribers of the company as well as the directors of the company. The Articles of Association must be printed and all the signees must present at least one witness.
Importance of The Articles of Association
The Articles of Association as an important document for limited companies, serve the following:
1. Governing the Company
The Articles of Association serve as the governing document of a company providing the rules and regulations of the company as well as the roles and obligations of every member of the company is present in a company's articles of association. All members of the company are to abide by the instructions present in the Articles of Association or else they will face sanctions which are present in the articles of association.
2. Legal Requirement
The Articles of Association are a legal requirement for all limited companies and without this document, a limited company cannot be incorporated in the UK. The article must be submitted to the Companies House during registration for incorporation of any company in the United Kingdom.
Since the Articles of Association os more of a constitutional document, they must be provided by limited companies during company application
3. Clarity
The Articles of Association offer clarity to the executive officers of a company on their roles and responsibilities as executives of the company.
For this reason, Articles of Association must provide vivid, the roles and responsibilities of each member of the company as well as every benefit attached to the executive position. the Articles of Association should vividly differentiate between the duties and obligations of the secretaries and directors of the company.
4. Protection of Interest
The Articles of Association also protect the interest of shareholders, since the AoA states the percentage at which shares are to be distributed in a company.
This is to avoid any form of dispute or conflict of interest that may arise between shareholders and directors in the company. The Articles of Association should also state the payment to be rendered to employees if the company any employee is available in the company.
5. Flexibility of Terms
The Articles of Association also provide the members with flexibility of terms and the members of the company can change terms in the Articles of Association by applying for a change to the Companies House and these changes must also be implemented in the company's public records. A change must be reported to Companies House and unless approved, cannot be implemented in the articles of association. The directors and also persons with Significant importance to the company must also sign and agree to any change that should be implemented in the company's articles of association
The Articles of Association are a notable document and play a vital role in the management and overall functioning of the company and without the Articles of Association the company cannot be incorporated. Any changes in the structure of functioning of the company must be implemented in the Articles of Association and also the company's public records and failure to do so will attract sanctions from the company governing body which is the Companies House.
It also plays a major role in safeguarding the interest of shareholders and directors of the company by adequately giving the procedures for decision-making as well as the percentage of distribution of profits among the shareholders in the company. It also outlines the power of every director or shareholder in the company as well as sanctions for various offences in the company.
With this, you have to note and keep in mind that an Articles of Association is the heart and the key to the incorporation of a company in the UK and is very important to every company present in the UK and just be updated whenever there's a change in the company
What is the Content of The Articles of Association?
Below is some of the content of the Articles of Association.
1. Company Name
The Articles of Association must contain the company name in full and specify the legal structure whether it is a private or public company.
2. Registered Office Address
The registered office address is the legal location of a company and this is the location displayed on the public records of the company at Companies House.
3. Business Activities
the Articles of Association must also contain the business activities of the company as well as the industry and if the company has many business activities, they should all be mentioned in the Articles of Association of the company.
4. Share capital
It contains the share capital as well as the number of shares given out and the rights and power attached to every share type.
5. Dividends
It must also contain the percentage at which profits are to be shared in the company.
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Conclusion
the Articles of Association is an important document that must be provided by the company during the company incorporation.
it contains all the rules and regulations governing the company, the roles and obligations of directors and shareholders, including other members of the company.