Sole Director Articles of Association Amends

Sole Director Articles of Association Amends Ensure your past and future decisions as a sole director are valid and binding on your company

Following a recent change in the law
, as a sole director, you may not have the power to run your business. When incorporating your company, you may have unknowingly ticked the box to incorporate with the “Model Articles”, but this means you may not have the power to run your company
.

To fix this,
you’ll need an experienced corporate lawyer to review your articles of association
. We can review and amend your articles of association, making sure your past and future decisions as a sole director are valid and binding on your company.

Articles of association are a necessary part of company formation. They represent a contract between the shareholders of a company and the company itself, as a legal entity in its own right. They dictate the way the company is run on a day-to-day basis and are designed to protect the interests of shareholders.

A recent change in law means that a company with a single director that has the Model Articles for Private Companies as the basis of its articles of association with additional amended or bespoke articles of association overlaid may need to amend its articles of association to allow the sole director to effectively make decisions, and run the company and its business.

You can find out more about the recent legal changes in our Sole director articles of association update.

If you’re a private sole director company with the Model Articles for Private Companies adopted (without amendments), you need to:

• Amend your articles to allow the sole director to validly make decisions in respect of the company;
• assess if any past decisions need ratifying.

There are three main ways in which you can go about amending your articles of association:

• By adapting the wording
• By inserting entirely new wording
• By rewriting the document in its entirety to reflect the new changes

All of the above will need to be approved by a special resolution of the company’s shareholders with all documents being in the required legal form with relevant documents being filed at Companies House.

You are able to make the amends yourself, however, it’s always best to speak to corporate law experts who are able to help you plan for the future.

When amending articles of association, as you will be asking the shareholders of the company to pass a resolution, you may want to consider whether any other provisions should be added to the articles of association, which are things not covered by the Model Articles. These could include things like:

• pre‑emption rights on transfers of shares – meaning a shareholder wishing to sell their shares must first offer them to existing shareholders before offering them to a third party (unless specified in the articles, shareholders may sell their shares to whoever they wish).
• leaver provisions – meaning where someone is a shareholder and also a director, contractor or employee of the company should they ‘leave’ the company, they would be required to put their shares up for sale to the other shareholders (unless specified in the articles, leavers may keep their shares and enjoy the profits of the company indefinitely).
• small share buybacks – subject to criteria set out in law, a company may use a simplified procedure to buy back its own shares out of capital up to any amount in a financial year not exceeding the lower of £15,000 and the nominal value of 5% of the Company’s fully paid share capital at the beginning of each financial year of the Company – potentially useful when exiting ‘leavers’.

The process has been made as easy and cost effective as possible for you. All you need to do is supply us with a Microsoft Word version of your company’s articles of association and one of our corporate experts will then prepare the amendments to your articles.

Once your amends are complete, you’ll receive board minutes, shareholder resolutions and amendments to your company’s articles of association that are needed to empower you. This will…