What are the ‘articles of association’ of a company?

Every company must have articles of association.  The articles of association set out the basic constitutional rules of a company covering matters such as the proceedings of directors and shareholders, the transfer of shares, quorums for meetings, conflicts of interest, arrangements for proxy voting, classes of shares, etc.

For companies incorporated on or after 1 October 2009, the default articles of association will be the Model Articles.  For older companies, the default articles were a version of Table A.  Many companies either replace these entirely or modify them in order to ensure that their articles suit their needs.  For example, it is common to add pre-emption provisions to set out what happens when a shareholder wants to transfer shares so that the other existing shareholders have first option to buy them.   The articles may also be modified to give different rights to different classes of shares.

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