Do You Have Two Shillings And A Sixpence? Is It Time To Update Your Company’s Articles?

All companies are required by law to have Article of Association (Articles). The Articles are a public document which sets out how a company is to be run and creates a binding agreement between its members.

Timeline

Articles have been used since the mid-19th century:

• the first version was known as “Table B” under the Joint Stock Companies Act of 1856;
• in 1862 it changed to “Table A” under The Companies Act; and
• finally in 2009 the Model Articles were introduced as the standard Articles (the lates version was published on 28 April 2013).

Articles are not automatically update to the latest version. For a number of companies, their Articles are outdated and do not align with the current legislation or how they actually work in practice. For example:

Table A: –

1906

• “The directors may decline to recognise any instrument of transfer unless (a) a fee not exceeding two shillings and six pence is paid to the company in respect thereof…” Needless to say our currency has moved on since!

1948

• “The company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year…”  A annual general meeting is no longer compulsory.

1967

• “The secretary shall be appointed by the directors for such term…” Company secretaries are no longer a required.

1980

• All meetings to be in person. Electronic communication is now recognised.

2007

• Ordinary and special resolutions require a meeting to be considered. Written resolution procedures have now been introduced.

Whether a company’s Articles work for you and your business will depend on a number of factors. Crucially, a failure to comply with your Articles can result in a defect in process and invalidate a decision that you are trying to make. Making sure that they are up to date and work for your business is therefore key to good practice and ensuring that your decisions as a director or shareholders are not undermined.

Any changes to the Articles will need to be approved via a special resolution, which will require at least 75% of the votes.

If you would like to review a company’s Articles or discuss any concerns you may have, please get in touch with the Wilson Browne corporate commercial team.