New forms of model articles will apply to companies incorporated on or after 1 October 2009.

Background

The Companies Act 2006 gives the Secretary of State power to prescribe model articles of association for companies. The Companies (Model Articles) Regulations 2008 set out model forms for a private company limited by shares, a private company limited by guarantee and a public company.

The relevant model articles will apply by default to a company incorporated on or after 1 October 2009, unless it chooses to vary or exclude those articles.

The Government has not developed model articles for specific types of private companies limited by guarantee or for unlimited companies. These companies are relatively rare and often have specific needs that, arguably, do not justify a standardised approach.

The model forms

Private company limited by shares: One of the principles underpinning the 2006 Act is "think small first". This is why the new regime provides separate model forms for private and public companies limited by shares.

This is in contrast to the current Table A, which applies to all companies limited by shares. The private company model reflects the needs of the small, owner-managed business. To keep the model as simple as possible, there are some assumptions. For example, the model assumes there will not be alternate directors or partly paid shares. Also, the Government has concluded that the model form should not repeat matters which the 2006 Act deals with in detail. These include, for example, the rules on resolutions, meetings and company communications. As a result, there are 53 articles in the new model form compared with 118 in Table A.

Of course, if a private company wants or needs to deal with matters not covered by the model form, it can include them. It can do so either on incorporation or, afterwards, by changing its articles by special resolution.

Private company limited by guarantee: The model articles for private companies limited by guarantee closely follow those for private companies limited by shares but do not have provisions about shares.

Public company limited by shares: The Government recognises that public companies are more likely to have tailor-made articles. It considers that the model articles will be used as a drafting resource rather than a stand-alone template. The articles aim to cover all the areas currently dealt with in Table A as well as other provisions which the Government found to be common in public company articles.

Existing companies

Companies incorporated before 1 October 2009 will keep their existing form of articles. So a company whose articles are based on Table A will continue to have articles based on Table A until such time as it chooses to update them. Whilst for many companies there will be no immediate need to do so, others will no doubt want to ensure that their constitutions are brought up to date at an early stage.