Assembling The Articles Of Association
And there it is, after much contemplation, you’ve decided to set down roots for the company you’ve always wanted to establish. Maybe you already have a number of individuals lined up willing to invest in your brilliant business idea!
But first things first – you’ll need to get a few documents in order.
Not sure which ones to start with? Not to worry – we (Simplebooks) are here to help you assemble the paperwork you require!
What is meant by “Articles of Association” ?
The articles of association is, quite true to its name, a mandatory set of documents created by the associates of a newly founded company, that specify the regulations for a company’s operations and defines a company’s purpose.
Still confused? Think of it this way. The articles of association is somewhat of a user manual for the company, as it consists of all the rules that govern the company’s processes. These rules are the ones which are previously agreed upon by the directors, shareholders and the company’s secretary. They can vary from simple, straightforward documents to very long and bespoke ones depending on the different share rights and decision making processes that they may deal with.
What do the Articles of Association Consist of?
The Articles of Association consists of a number of clauses. If we’re to break them down, they maybe;
- The company name
- The purpose of the company
- The organisation
- Shares and shareholders
- Director and Secretaries
The Company Name
Considering the fact that your company is a legal entity, a key component of the articles of association, is the company name.
Once you’ve settled on a name for your company, and begin setting it up, certain jurisdictions will require you to include a suffix such as “Inc” or “Ltd” – to show that the entity is infact a company. These jurisdictions will also prevent you from using confusing words such as “government” or “church” (unless it is a specific type of entity which requires such names) and offensive or heinous vocabulary.
- For Overseas Companies – Forms 44,45 and 46 (obtained from the Registrar of Companies)
- For a change in company address – Form 13 (obtained from the Registrar of Companies)
- If there is a change in directorial roles – Form 20 (obtained from the Registrar of Companies)
- If there is a change in the company name – From 03 (obtained from the Registrar of Companies)
- For BOI companies – The BOI Registration
The Purpose of the Company
The reason for the creation of your company should be clearly stated in your articles of association, along with the motives, and what you hope to accomplish with its creation. The way in which this is done also depends on the level of jurisdiction, for example some may be satisfied with a general explanation such as “management”, while others may require a more elaborate one, such as “the operation of a retail clothing store”.
The methodology in which day-to-day tasks may be accomplished, along with further details on said tasks, is also an important area that needs to be encompassed into your articles.
The legal organization of the company is generally comprised of basic details, such as
- The company address
- Number of directors
- Identity of the founders
- Original shareholders etc.
These too are mandatory and needs to be clearly stated in your articles.
Shares and Shareholders
It is important to clearly establish the number, and type of shares that your company’s capital may be comprised of. Usually, there may be one type of “common shares”, and several types of “preferred shares”.Once the types of shares, as well as the manner in which they may be distributed, have been included in the articles of association, it is possible for the company to issue them when required.
Along with the shares, the ways in which shareholder meetings will be conducted, and the rules that govern such meetings should also clearly listed in your articles. This may be, for example, the inclusion of an Annual General Meeting (AGM), with specification on the details that may be discussed at the said meeting (such as financial statements, the ratification of the director’s actions etc.)
And there you have it, a simple look at how to assemble your very own articles of association. Have any questions you want answers? Let us know in the comments below.