SGS 8 - Amendments of Articles of Associations PDF

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Summary

LPC Business Law articles of association notes. contracts of companies etc....

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Articles of Association are the internal constitutional documents which regulate a company. It includes information on how the company will run, who has responsibilities, internal management structure, directors liabilities, shareholders liabilities, who manages employees etc. The Articles of Association is a binding contract between members and the company. What is the process of changing the Articles of Association? This can be done by either ordinary or special resolution. Section 282 (1) states, ‘an ordinary resolution of the members of a company means a resolution that is passed by a simple majority.’ Section 283 (1) states ‘A special resolution of the members of a company means a resolution passed by a majority of not less than 75%’ A written is the easiest way when there are only a few shareholders in a company, as it avoids the need toc all and hold a meeting of all shareholders. This process requires the parties for the change to have a copy of the articles and then each shareholder will sign the resolution. A certified copy of this resolution must be sent by post to Companies House within 15 days of it being signed together with a copy of the new or amended articles. An ordinary resolution is passed by a ‘simple majority’ of members, meaning that the votes ‘for’ must equate to more than 50% of the total votes cast by each member’s voting rights The resolution is either: 1. Voted upon at a general meeting, such as the AGM; or 2. Passed by a written resolution Ordinary resolutions cannot be passed by a written resolution if: 1. Removal of a director before the end of their planned term 2. Removal of an auditor before the end of their planned term In some cases, a written resolution isn’t suitable when there are many shareholders. A special resolution can be discussed at a general meeting. To get a special resolution passed at a general meeting, the directors of the private limited company must: 1. Hold a board meeting and resolve to convene a General Meeting and approve a circular to send to the shareholders. The circular sets out reasons that the articles need to be changed and should summarise the changes which will occur from the new articles. 2. Hold the general meeting. The special resolution to amend the articles of association will have to be passed by a majority of 75% or more. 3. The directors note that the special resolution has been passed and resolve to send a copy to Companies House alongside new articles. 4. A certified copy of the special resolution must be sent by post to Companies House within 15 days of the general meeting. 5. Copies of the new or amended articles incorporating a copy of the special resolution should be sent to interested parties as a minimum the directors and auditors. 6. The company must retain minutes of the meeting and a copy of the resolution for its records.

DRAFT/PRECEDENT TO AMEND ARTICLES OF ASSOCIATION

THE COMP COMPANIES ANIES ACT 2006 WRIT WRITTEN TEN RESOLUTION - of [______________] LLTD TD (the "Company") Company Number: ________ PRIV PRIVA ATE COMP COMPANY ANY LIMITED BY SHARES

CHANGE OF AR ARTICLES TICLES OF AS ASSOCIA SOCIA SOCIATION TION

At a general meeting of the Company, duly convened and held at [address where meeting held] on [date meeting held], the following resolution was duly passed as a special resolution.

SPECIAL RESOLUTION

THA THAT T the existing articles of association of the company be modified as follows:

Articles 1 and/to 5 to be removed and the numbering of the subsequent articles be amended accordingly; AND/ OR The new attached articles numbered 1 and/to 5 to be implemented AND/ OR The wording of article 7 to be amended to read: ‘Insert new wording of article 7’.

_____________________ [Insert name of Director/Company Secretary] Director/Company Secretary

(delete as appropriate)

ADOPTING NEW ARTICLES OF ASSOCIATION

THE COMP COMPANIES ANIES ACT 2006 WRIT WRITTEN TEN RESOLUTION - of [______________] LLTD TD (the "Company") Company Number: ________ PRIV PRIVA ATE COMP COMPANY ANY LIMITED BY SHARES

ADOPTION OF NEW AR ARTICLES TICLES OF ASSOCIA ASSOCIATION TION

We the undersigned, being all the members of the Company who at the date of this resolution are entitled to attend and vote at general meetings of the Company, hereby unanimously resolve upon the following resolution and agree that it shall be as valid and effective as if it had been passed as a special resolution at a general meeting of the Company duly convened and held.

THA THAT T the existing articles of association in their entirety be removed and substituted for the new articles of association attached to this resolution.

DATED:

SIGNED:

___________________

(Name of 1st shareholder)

___________________

(Name of 2nd shareholder)

___________________

(Name of 3rd shareholder)

___________________

(Name of 4th shareholder etc.)

Joining the Company There are two requirements to become a shareholder of a private limited company by shares. Under S112 CA 2006: (a) The person must agree to become a shareholder of the company and (b) His name must be entered into the register of members Those persons who signed the memorandum of association as ‘subscribers’ automatically become the first shareholders of the company when the Registrar of Companies issues the certificate of incorporation Buying Shares A company will often seek to raise money by issuing new shares to shareholders in return for money or money’s worth (such as property). The company might decide to issue these new shares to the existing shareholders, or it might wish to bring in outsider investors and therefore new shareholders. The procedure for buying new shares from the company is called the allotment of shares. The allottee (the purchaser) agrees to become a shareholder by formally applying to the company to buy the new shares, and becomes a shareholder when his name is entered in the register of members Buying shares from existing shareholders Shares in a company are a form of property, and as such may be bought or sold. If an existing shareholder wishes to reduce or remove his financial investment in the company, he may try to sell some or all of his shares to another person. That other person who buys the shares will himself become a shareholder of the company. When this happens, no new money is generated for the company. The procedure for buying existing shares in a company is called the transfer of shares. Shares, being property, may be given away instead of being sold. In such a case, the existing shareholder may choose to gift some or all of his shares. In either case, the recipient or recipients of the shares will become a new shareholder or shareholders in the company. Again, no new money is created for the company here, but ownership has changed. The process of becoming a shareholder by receiving a gift of shares is also known as the transfer of shares. The recipient of the gift (the transferee) agrees to become a shareholder by submitting the share transfer (the document transferring ownership) to the company, and becomes a shareholder when his name is entered in the register of members (CA 2006, s 112(2)), subject to the directors not exercising any discretion to refuse to register the transfer of ownership...