{"id":15873,"date":"2023-04-30T12:46:00","date_gmt":"2023-04-30T12:46:00","guid":{"rendered":"https:\/\/riaabarkergillette.com\/uk\/?p=15873"},"modified":"2024-09-19T15:13:20","modified_gmt":"2024-09-19T15:13:20","slug":"articles-of-association-and-shareholders-agreements-explained","status":"publish","type":"post","link":"https:\/\/www.riaabarkergillette.com\/uk\/articles-of-association-and-shareholders-agreements-explained\/","title":{"rendered":"Articles of association and shareholders’ agreements explained"},"content":{"rendered":"\n

A company’s articles of association (otherwise known as ‘Articles’) set the governance rules and procedures the company, its directors and shareholders must follow. Articles are mandatory under the Companies Act 2006<\/a> – all companies incorporated in England and Wales must have them.<\/p>\n\n\n\n

Companies with more than one shareholder often enter into a shareholders’ agreement to establish further constitutional rules. This article examines the roles of Articles and shareholders’ agreements, their differences, and the reasons each business might consider having both in place.<\/p>\n\n\n\n

What are Articles?<\/h3>\n\n\n\n

Articles are constitutional documents of a company which need to be filed and are open to inspection at Companies House<\/a>. Company law prescribes certain forms for Articles, called “model articles”. A company can amend the model articles to suit its needs.<\/p>\n\n\n\n

Articles set out the company’s essential management and administrative structure. They prescribe the rights attaching to its shares (including voting, dividend and capital distribution rights). And they regulate the company’s internal affairs, such as how shares can be issued, transferred or bought back; procedures for board and shareholder meetings; and the powers and duties of directors and how they may be appointed and terminated.<\/p>\n\n\n\n

What is a shareholders’ agreement?<\/h3>\n\n\n\n

A shareholders’ agreement is a contract between a company’s shareholders and, often, the company. Like the Articles, this agreement seeks to regulate the company’s and its shareholders’ conduct by setting out their respective rights and responsibilities, but usually within the broader context of establishing a fair relationship between them and preventing potential shareholder disputes. However, unlike Articles, shareholders’ agreements are not mandatory. Importantly, they are private between their parties and not filed at Companies House.<\/p>\n\n\n\n

Typical shareholders’ agreement provisions include:<\/p>\n\n\n\n