Glossary · UK
What is Articles of Association?
The constitutional document of a UK limited company that governs its internal management, including shareholder rights, director powers, share transfer rules and dividend policies.
Full Definition
Articles of association form the legal constitution of a UK limited company, setting out the rules by which the company is run. When a company is formed, it can adopt the default Model Articles prescribed by the Companies Act 2006, which are straightforward and suitable for simple owner-managed companies. Alternatively, companies -- particularly those with investors, multiple share classes or complex ownership structures -- will adopt bespoke articles drafted by a solicitor. Custom articles can include provisions such as: different classes of shares with different economic or voting rights (A, B, C ordinary shares); pre-emption rights requiring existing shareholders to be offered new shares first; drag-along rights enabling majority shareholders to force minority shareholders to join a sale; tag-along rights protecting minority shareholders by allowing them to join a sale on the same terms; and reserved matters requiring shareholder approval for certain decisions. Articles are a public document filed at Companies House. They can be amended by a special resolution of shareholders (requiring 75% approval). Any conflict between the articles and a shareholders' agreement will generally be resolved in favour of the articles in relation to third parties, though between shareholders the shareholders' agreement may prevail.