Model articles for private companies? Did you hear about that? Do you know what is it?
The organization’s Model Articles is an official document containing standard default provisions that govern how the company operates. As part of a limited company constitution, the articles set out the internal rules and regulations that must be followed by the members and directors of the company.
Every private and public company based in England and Wales, Scotland and Northern Ireland is legally required to have articles at the time of submission.
Model Articles was introduced on 1 October 2009, replacing ‘Table A’ as the default set of UK limited companies installed on or after that date.
Owned by the Companies Act 2006 and provided by the Companies House under The Companies (Model Articles) Regulations 2008, three types of Model documents are available from three limited companies in the UK:
- Private companies are limited by stocks
- Private companies are limited by warranty
- Private Limited Companies (PLC)
Organizational model articles apply automatically to every UK company upon submission, unless the company chooses to accept modified or bespoke articles instead.
They provide a good foundation and are very suitable for small companies where there is a small risk of disputes between shareholders and directors.
However, it is possible to schedule a specific offer in Model’s articles, or to create completely new articles, at any time after inclusion to meet the changing needs of the business.
Also read: Company Structure for Organizational Growth and Ultimate Success
Table of Contents
What is included in the Model articles of the organization?
The provisions included in the organization’s Model articles cover five key areas (where applicable):
- Members’ liability – The financial liability of shareholders or guarantors is limited to their limited share price or guarantees
- Directors – Powers and responsibilities, decision-making processes, hiring and termination, salaries and expenses.
- Shares and allotments – Payment of shares, shareholding rights, allotment and transfer of shares, payment of shares and other allotments
- Decision-making by members – Organizing regular meetings, voting in general meetings, alternatives for decision making
- Management arrangements – Approved types of corporate communications, company logo, company record audits, directors’ guarantees and insurance
Can I apply Model articles to a company with one director / shareholder?
Limited private companies can be set up with only one director and only shareholder, which is very common. Model Articles, therefore, may be used by a company with only one director and shareholder, without the ambiguity of the Model Article 11 (2) which states:
Naturally, having at least two directors in a regular meeting would not be possible in a company with only one director. To fully understand this provision, it should be read in conjunction with Article 7 (2), which states:
“If –
- the company has only one director, too
- no topic provision requires more than one director,
general law does not apply, and the director may make decisions without regard to any of the terms of the articles relating to the decision-making of directors. ”
The provision of a quorum of two directors at meetings applies only to companies with two or more directors.
When are the Model Articles for private companies inappropriate?
While it is a good start for many new companies, certified Model articles will not fit everyone from scratch. It may be necessary to modify Model articles or accept bespokees before or after installation there:
- Extract multiple sharing classes from any assignment class other than Normal
- Offering the option to share shares as unpaid, underpaid, or fully paid
- There will be other directors
- Limits the power of directors
- Empowering directors
- Includes stock transfer restrictions
- It requires a limited private company to hold regular annual meetings
- Giving notices and holding meetings via electronic means
- Removing provisions that prevent directors from voting in the event of a conflict of interest
Changing model articles for private companies
No two companies are alike, and businesses are changing over time, requiring other companies to add or remove offers in their articles, change the names of certain offers, or create a collection of new articles that fit the needs of the business over time.
Subject to any changes made to the model types in accordance with company policy, members may agree to change the organization’s articles by submitting a special resolution to the general meeting or in writing. This type of decision requires a majority vote of at least 75% of the share vote.
If a company changes its articles, a copy of the new articles and the members’ decision must be submitted to the Companies House within 15 days of any change. If the company goes back to Model’s articles, there is no need to send a copy of the articles, but Companies House has yet to be notified of the change and provided with a copy of the decision.
In the event that any provision of the articles does not comply with the Companies Act 2006, the Model articles will supplement those specific provisions. Similarly, if modified or supported articles are silent on certain issues, the automatic use of model articles will work to cover those items.
Where do I find my company organization articles?
You will usually receive meeting articles by email or post after your company is installed, depending on the preferred installation method.
Company House offers Model articles for the meeting only, so you will have to provide your own if you want to receive modified or bespoke articles. In addition, you can only use the online installation service in Companies House to register a company with Model articles – everything else must be mailed, which is very expensive and takes at least 8-10 days to process.
Alternatively, you can set up any type of online company using Quality Company Formations using our wide range of inexpensive and professional input packages, including private equity limited companies and private guaranteed companies.
All corporate applications are approved by Companies House, usually within 3-6 working hours. You will then receive a digital copy of the documents you have selected for email attachment, as well as your installation certificate and other company building documents.
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