Should You Still Incorporate A Company With Model Articles?

 


For those who might otherwise be unaware, the Model articles of association take the form of a legal document outlining the standard default provisions that regulate how a company is run.

If you are looking to incorporate a limited company, articles in the firm’s constitution will set out the internal rules and regulations that the company’s members and directors are required to follow.

It is a legal necessity for any public or private company formed in England and Wales, Scotland, or Northern Ireland to have articles at the time of incorporation.

The question of having one, or multiple directors

The Companies Act prescribes a standard format for the “Model Form” articles, with this “Model Form” being applicable in the event of the company not having commissioned a set of bespoke articles for it.

However, there are various circumstances in which the suitability of the Model Form articles might be in question, and a recent court case has shone the spotlight on one potential issue: the number of directors required in order to form a quorum at a board meeting.

According to Model Article 11(2), the quorum for directors’ meetings may be fixed, from time to time, with this decision being made by the directors. However, it must never be below two, and in the absence of the quorum being otherwise fixed, it is indeed two.

Model Article 7 says that if the directors make such a decision, it is required to be either a majority decision at a meeting, or a unanimous decision, taken in compliance with Model Article 8.

Model Article 7 proceeds to state that in the event of (a) the company only having one director, and (b) no provision of the articles stipulating a need to have more than one director, certain formalities that would otherwise come into play for director decisions will not be applicable.

Clearing up the confusion about how Model Articles 7 and 11(2) work together

The exact mechanics of the relationship between the aforementioned Model Articles hasn’t always been entirely clear to some observers. Some people believed, for instance, that Model Article 7 gave just one director – a sole director – the ability to always act and make all decisions.

However, the recent court judgement stated that Model Article 11(2) actually amounts to a quorum of two directors being needed. This means it is necessary for two directors to be present if a meeting is to be quorate.

In practice, then, a company that makes use of the unamended Model Articles is required to have a minimum of two directors in order to manage the business and make decisions in relation to the company.

London Registrars is working closely with a team of specialists in company secretarial and business support services who can be by your side to assist you in fulfilling your corporate governance and compliance responsibilities.

Our team here can also assist with our process agency services. For more details about the advice, guidance and support we can provide, please do not hesitate to contact our specialists via phone or email.

 

Comments

Post a Comment

Popular posts from this blog

Things You Might Not Have Known About Process Agency Services - London Registrars

Image
If you have landed on this page having searched online for information about what a process agent is and how this type of service works, you are in the right place. Our team at London Registrars is ready to give your organisation outside the UK the benefit of a UK-based process agent, who will be able to receive formal notices on your behalf. However, at this stage, there may also be various things you don’t know about what a process agent does and doesn’t do. So, we thought we would outline a few things that mark out process agency services , to guide you in your choices. Process agents are known by various terms. A process agent isn’t always referred to as a ‘process agent’; sometimes, you might have come across references to terms like ‘agent for service of process’, ‘registered agent’, or ‘resident agent’. Regardless, these all describe the same service. Whilst it is not a legal requirement to appoint a process agent, you may find that in the event of your organisation want...
Read more

What Is A Process Agency Part 2 - London Registrars

Image
In our previous blog post here at London Registrars, we wrote about the significance and role of a process agent service , including what a process agent is, in what circumstances it might be needed, and who can act as a process agent. Turning to part two of our guide, we will answer more of our readers’ and clients’ pressing questions, so that you can be sure of only making the most informed decisions for your own organisation’s requirements. What is a process agent letter? The term “process agent letter” refers to the letter that appoints a process agent in England and Wales (also known as the Process Agency Agreement) so that the agent can accept legal proceedings on behalf of a party that has submitted to the English courts’ jurisdiction, but which lacks a registered office in the jurisdiction. How might a process agent be involved in a loan agreement? A process agent service is often especially appropriate in situations involving loan agreements – for example, where an ...
Read more

The Benefits Of Hiring A Process Agent - London Registrars

Image
For organisations based outside of the UK that have reason to conduct business with UK suppliers, or under a contract subject to UK jurisdiction, or attempting to raise a loan from a City institution, a UK process agent service can be crucial for ensuring service of notices, proceedings or documents can be accepted by such organisations within the UK. A City lender, for instance, will typically expect a borrower from another country to appoint a UK-based process agent so that, in the event of the borrower defaulting on the loan, they can still receive formal notices in the UK in relation to this. So, what are some of the particular benefits of a UK process agent service that your organisation from another jurisdiction should be aware of? A professional process agent offers specialist expertise Turn to an organisation like London Registrars for your firm’s process agent service in the UK, and you can be sure you will be represented by someone in the UK who possesses the expertise and e...
Read more