Could your company benefit from new articles of association?

A company's articles of association are a vital part of that company, together with the memorandum of association - in cases where the memorandum exists - forming the constitution of the company. This document is instrumental in defining director responsibilities, the kind of business that is to be undertaken and the means by which control is exerted over the board of directors by shareholders. However, clients of London Registrars' (http://www.london-registrars.co.uk) company secretarial services may wish to take advantage of a certain change in company law in recent years.

That change in company law was the introduction, on 1 October 2009, of 'the Model Articles', or in other words, the current form of articles of association for private companies and PLCs. It enables the directors and shareholders of companies formed after that date to make the most of the simplified procedures for running their business that the Model Articles set out.

There may not seem to be an obvious compelling reason for a company to invest in new articles of association, not least given that if the company was established before October 2009, it is not legally required for it to do so. However, it is unlikely that the company's existing articles of association incorporate the new procedures, and there is a clear opportunity for firms to have their articles reviewed to ensure their continued fitness for purpose, or even have them amended to reflect the changes in company law.

The latter step is what London Registrars recommends, with its company secretarial services that include the review of existing articles and the proposition of any amendments that may be appropriate to ensure compliance and that suit the company's individual circumstances. Many companies that were incorporated prior to October 2009 have already benefited from such services, with directors perhaps having approached London Registrars in the first place because the existing articles were out of date, or the articles were bespoke in nature but the purposes for them were no longer applicable.

There are many ways in which the Model Articles legislation enables a company's articles of association to be suitably updated through London Registrars' company secretarial services. The chance may have been taken to replace difficult to understand language in the existing memorandum and articles with more easily understood and user-friendly English, or any limitation on the type of business that the company can undertake may have been removed.

Similarly, such company secretarial services enable the removal of the upper limit on the share capital of the company, allowing new shares to be issued by directors. A company's articles may also be updated to reflect a need for greater electronic communication with shareholders by directors and shareholders.

This is not an exhaustive list of the possibilities when companies take advantage of such company secretarial services from London Registrars (http://www.london-registrars.co.uk) to update their articles of association. Nonetheless, it indicates just how the change in company law could better serve directors and shareholders.

Editor’s Note: London Registrars (http://www.london-registrars.co.uk) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.