Articles of association are written rules that outline how a company should be managed and governed. These rules are mutually agreed upon by the company's shareholders, directors, and secretary. Companies have the option to adopt 'model articles,' which are the standard rules for running a company, or to create their own custom articles. If a company opts to draft its own articles, it is not eligible for online registration.

What is the purpose of articles of association?

Under the Company Act, when you register a company, it is required to have both articles of association and a memorandum of association.

Articles of association delineate the regulations for managing, governing, and owning the corporation. This includes specifying the responsibilities and powers of the directors and determining the extent of influence shareholders wield over the board of directors.

This is crucial as it can prevent conflicts within the company and instill confidence among shareholders in the decisions made by the directors.

For instance, articles of association can ensure that directors take certain actions without requiring shareholder approval and prevent shareholders from making unreasonable demands of the directors.

Articles of association are considered public documents. Should shareholders wish to expand on the articles of association without disclosing additional information to the public, they also have the option to create a shareholders' agreement.