ACRA Approved Articles of Association

The Companies Act 2006 introduces one of the most fundamental changes in company law for many years by replacing the previous Memorandum & Articles of Association based on Table A Regulations with what is now simply the Articles of Association. Table A regulations cease to exist and are replaced by the model articles prescribed in the Act, and the Memorandum now contains nothing more than a statement of intent to register a company and is a historic document of no further value following the incorporation of a company.

Whilst the model articles now prescribed in the Act can be adopted in full, ACRA believes this leaves much to be desired for the sake of the proper conduct and management of a company. Having taken top-level legal advice on this issue, ACRA has commissioned comprehensive bespoke Articles of Association that are fully compliant with the Companies Act 2006. The ACRA approved Articles expand on the model articles prescribed in the Companies Act 2006 so as to ensure companies using these Articles are properly equipped to benefit from the new Act as far as is practicable.

ACRA approved Articles are prepared by senior lawyers at Hill Dickinson with over twenty years’ experience as members of the Law Society Standing Committee on Company Law.

We understand that some registration agents who are not associated with ACRA will be advising clients to register companies by adopting the model articles, thus saving cost and effort in producing bespoke articles. However, we strongly believe that they are far too simplified for practical purposes and will possibly cause potential problems in the future operation of the company.

ACRA strongly recommends use of the ACRA Approved Articles for anyone incorporating a new company as well as existing companies wishing to update their old Memorandum and Articles of Association drawn up under the 1985 Companies Act or previous Acts.

Key Features

• the model articles do not allow for the issue of nil or partly paid shares;
• they make no proper provision for multiple classes of shares;
• they do not contain provisions for alternate directors which could be useful for companies where directors are to be absent for extended periods;
• they contain no provisions expressly covered by the Act such as members’ rights, proxies, meetings regimes, share pre-emption or directors conflicts, assuming instead that all directors have sufficient knowledge of the Act in detail – clearly an unreasonable assumption in the majority of owner managed businesses;
• they include no provision for the appointment of a company secretary if the company has one.