Now that the Companies Act 2006 (“the Act”) is fully in force, James Tarling, a Principal in the Commercial Team, comments on the new Act’s implications on a company’s Articles of Association (“Articles”) and whether it is necessary to make any changes to your company’s Articles.
In the last stage of the implementation of the Act in October 2009 a new set of default model Articles were introduced (referred to as the Model Articles), which replace the default model Articles under the Companies Act 1985 which were commonly referred to as Table A. It is not compulsory for existing companies to make any changes to their Articles. However, changing a company’s Articles may be the best way to ensure that the company complies with the most up to date company law and avoids any conflict with changes introduced by the Act. Some changes in the Act override a company’s existing Articles. It will also bring the Articles in line with a change made by the Act which deems that most provisions of a company’s Memorandum of Association are now incorporated into the Articles.
Although not legally necessary many companies are taking the opportunity to update their Articles now. This has the advantage of bringing together in one place all of the regulations and avoids having any confusing references to provisions that will no longer apply in your Articles. The advantages are probably greater for companies with more than one shareholder.
Another change made by the Act is that a company can dispense with the requirement to have a maximum authorised share capital. If it does not do so, then the company will continue to be restricted from allotting shares beyond that limit.
Companies no longer need to have a Company Secretary. If your company has decided that it no longer requires a Company Secretary, but the Articles of the company still refer specifically to there being a Company Secretary (rather than a reference to a Secretary’s duties), then the company must amend its Articles.
If you require any advice on any of the issues raised in this article or in respect of any other changes made by the Act, please do not hesitate to contact James Tarling by telephone on 01603 598000 or alternatively by email to jtarling@steeleslaw.co.uk