What are the articles of association?
The articles of association are the regulations for the management of a company. They bind the company and its members, and they cover matters the Act leaves to the company, such as share transfer, the board’s powers, and meetings. They cannot contradict the Companies Act or the memorandum.
No. The memorandum states the company’s name, objects, liability, and capital. The articles state how the company is run.
What do the articles regulate?
Section 5 says the articles contain the regulations for management. A company may include further matters. Typical regulations cover how shares are transferred, how directors are appointed, how meetings are called, and how a dividend is declared. Those clauses operate only inside the Act.
The articles are filed when the company is incorporated. For a new company that filing is part of SPICe+, with the memorandum. A private limited company uses the articles to record the limits on transfer and the maximum number of members the Act requires a private company to keep.
When does Table F apply?
Schedule I sets model articles. Table F is the model for a company limited by shares. If that company does not register its own articles, Table F applies. If it registers articles, Table F still applies to the extent the company’s articles do not exclude or modify it.
How are the articles altered?
Section 14 requires a special resolution. The board may propose the change. It cannot pass it. The members’ meeting needs the notice in section 101, which is 21 clear days, unless members holding at least 95 percent of the voting rights consent to shorter notice.
Section 14 requires the alteration and a printed copy of the altered articles to be filed with the Registrar within 15 days. The special resolution is also filed in MGT-14 within 30 days under section 117. Filing within 15 days meets both. Converting a public company into a private company, or the reverse, is an alteration of the articles and needs the additional approval the Act states for that conversion. The name change page is a different filing.
What is an entrenchment?
An entrenchment makes a specified article harder to change than an ordinary special resolution. Section 5 allows it only on formation, or afterwards by an amendment agreed by all the members of a private company, or by a special resolution of a public company. The entrenchment is notified to the Registrar.
One practical use of the articles is the power in section 161. The board may appoint an additional director only when the articles allow it.
Frequently asked questions
Four questions cover the memorandum, Table F, a board resolution, and an additional director.
Are the articles the same as the memorandum?
No. The memorandum states the company’s name, objects, liability, and capital. The articles state how the company is run. An article that conflicts with the Act or the memorandum gives way.
Does every company draft its own articles?
A company limited by shares may adopt Table F in Schedule I. If it registers no articles of its own, Table F applies so far as it is not excluded or modified.
Is a board resolution enough to change the articles?
No. Section 14 requires a special resolution of the members. The special resolution is filed with the Registrar.
Can the articles block an additional director?
Yes. The board can appoint an additional director under section 161 only if the articles give it that power.
Sources
The articles are section 5. An alteration is section 14. The model form is Table F.