A Companys Articles of Association

A company effectively has three choices as to the form of its articles. Under s. 19 CA 2006, the Secretary of State may prescribe model articles for public companies, private companies limited by shares and companies limited by guarantee. The model articles will be the default articles for companies incorporated from 1 October 2009. However, it is also open to such companies to choose to adopt Table A under the Companies Act of 1985.The nature of the contract established by the articles of a company is set out in s. 33(1) CA 2006, which provides that the provisions in the company’s articles bind the company and its members to the same extent as if they were covenants on behalf of the company and each member was to observe those provisions.Whatever form the company’s articles take, they are binding on both company and members. S33(1) states that The provisions of a company’s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.The effect of this provision is that members can sue if their membership rights are infringed. These rights are limited and rights of members which are not membership rights are not enforceable under s.33. In order to protect members, it is important, therefore, that any of their rights which are not membership rights are set out in a separate contract (such as a shareholders’ agreement) and not in the articles of association. It should also be noted that a company’s articles are deemed to be a complete contract and the Court will not imply any terms into them whether to create business efficacy or otherwise.