This practice note is the Law Society's view of good practice in this area. It is not legal advice. [Read more]
Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.
Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.
For queries or comments on this practice note contact the Law Society's Practice Advice Service.
There are ten mandatory principles which apply to all those the SRA regulates and to all aspects of practice. The principles can be found in the SRA Handbook.
The principles apply to solicitors or managers of authorised bodies who are practising from an office outside the UK. They also apply if you are a lawyer-controlled body practising from an office outside the UK.
1.1 Who should read this practice note?
Solicitors whose clients include businesses incorporated as companies (whether public or private, or limited by guarantee) or who are themselves incorporated.
1.2 What is the issue?
Articles of Association form the basis of a company's constitution. New Model Articles set out in a statutory instrument made under the Companies Act 2006, will apply by default to all new companies incorporated on or after 1 October 2009, unless they register Articles of Association of their own with Companies House on, or subsequent to, incorporation.
2 Existing Articles of Association
There are various provisions in existing Articles of client companies which are likely to be overridden by the new law. As existing Articles should be interpreted in the context of current law, your client should examine theirs in light of the provisions of the Act which are now in force.
You are not obliged to change Articles of Association to comply with the new law, but you should do so to ensure that:
- Articles are not inconsistent with, and therefore potentially overridden by, current law
- Articles take advantage as appropriate of the flexibility now available under the new law
3 The new Model Articles
3.1 Amendments to Table A
If your client has Articles based on Table A as set out in Regulations under the Companies Act 1985, you should check to see if the various amendments made to Table A to reflect the provisions of the Companies Act 2006 might usefully be incorporated. A black-lined version of the amended Table A can be downloaded from the Department for Business Enterprise and Regulatory Reform (BERR) website.
This amended version of Table A will apply automatically to all companies incorporated on or after 1 October 2007 and before 1 October 2009, unless they have registered their own Articles on, or subsequent to, incorporation.
3.2 Private companies
There are two forms of Model Articles for private companies:
- Articles for private companies limited by shares. It is expected that the Model Articles will replace Table A as the basis for the modern private owner-managed company.
- Articles for private companies limited by guarantee. This type of company is used particularly for charitable and not-for-profit organisations.
3.3 Public companies
If your client is a public company, particularly a company with traded shares, it will continue to require specifically tailored articles. The public company Model should be seen as a helpful guide to some of the required drafting and modernisation but it does not cover areas such as
- uncertificated shares
- sanctions for non compliance with share interest disclosures
- borrowing limits
4 More information
4.1 Legal and other requirements
4.2 Further products and support
4.2.1 Law Society Practice Advice Line
The Law Society provides support for solicitors on a wide range of areas of practice. Practice Advice can be contacted on 020 7320 5797 from 09.00 to 17.00 on weekdays.
4.2.2 Law Society Consulting
If you require further support, Law Society Consulting can help. We offer expert and confidential support and guidance, including face-to-face consultancy on risk and compliance. Please contact us on 020 7316 5655, or email email@example.com.
Find out more about our consultancy services
4.2.3 Model Articles
The Regulations set out the three sets of Model Articles for:
- public companies
- private companies limited by shares
- private companies limited by guarantee
Download the regulations (PDF 224KB)
4.2.4 Department for Business, Innovation and Skills (BIS)
BIS has issued a series of Frequently Asked Questions on Articles of Association under the Companies Act 2006.
4.2.5 Law Society publications
4.2.6 Training and events
The Society acknowledges the contributions of its Company Law Committee in developing this practice note.
5 Terminology in this advice
Must - a specific requirement in the code or legislation. You must comply, unless there are specific exemptions or defences provided for in the code or relevant legislation.
Should - good practice for most situations in the Law Society's view. If you do not follow this, you must be able to justify to oversight bodies why this is appropriate, either for your practice, or in the particular retainer.
May - a non-exhaustive list of options for meeting your obligations. Which option you choose is determined by the risk profile of the individual practice, client or retainer. You must be able to justify why this was an appropriate option to oversight bodies.