Model Articles vs Bespoke Articles of Association: Which Should You Choose?

What articles of association actually are

Articles of association are one of the two constitutional documents of a company, sitting alongside the memorandum of association. Section 18 of the Companies Act 2006 states that a company must have articles of association prescribing regulations for the company, and that unless it is a company to which model articles apply by virtue of section 20 it must register articles of association. Where a company does register its own articles, they must be contained in a single document and divided into paragraphs numbered consecutively.

The articles govern the day to day mechanics of how the company operates. They typically cover the powers and responsibilities of directors, how board and shareholder decisions are made, the issue and transfer of shares, the payment of dividends, and the conduct of general meetings. Because they bind the company and its members, the articles are the first document a court, a lender, or an incoming investor will read to understand who holds power and how it is exercised.

The Companies Act 2006 refers to a company's articles of association simply as its "articles". Whichever route a company takes, standard or bespoke, it will always have a set of articles in force from the moment it is incorporated.

What the model articles are and the three sets

Model articles are the standard default articles prescribed by regulations under the Companies Act 2006. Section 19 gives the Secretary of State the power to prescribe model articles of association for companies, allows different model articles to be prescribed for different descriptions of company, and confirms that a company may adopt all or any of the provisions of the model articles.

The current model articles are set out in the Companies (Model Articles) Regulations 2008, which came into force on 1 October 2009. There are three separate sets, each contained in its own schedule to those regulations. Regulation 2 provides that Schedule 1 prescribes the model articles for private companies limited by shares. Regulation 3 provides that Schedule 2 prescribes the model articles for private companies limited by guarantee. Regulation 4 provides that Schedule 3 prescribes the model articles for public companies.

Government guidance confirms that the latest model articles apply by default to all private and public limited companies incorporated on or after 28 April 2013. Companies incorporated between 1 October 2009 and 27 April 2013 are governed by the earlier version of the model articles unless they have adopted a different set.

When model articles apply by default

The default rule sits in section 20 of the Companies Act 2006. On the formation of a limited company, if articles are not registered, or if articles are registered only in so far as they do not exclude or modify the relevant model articles, the relevant model articles form part of the company's articles in the same manner and to the same extent as if articles in that form had been duly registered. In plain terms, the model articles fill any gaps you leave.

This has two practical consequences. First, if you incorporate without submitting any articles of your own, the full set of model articles for your company type applies automatically. Second, if you register your own articles but do not deal with a particular point, the corresponding model article still applies to cover that point, unless your registered articles have expressly excluded or modified it.

Section 20 also fixes which version applies. The "relevant model articles" are the model articles prescribed for a company of that description as in force at the date on which the company is registered. That is why the date of incorporation determines whether the 2013 version or the earlier 2009 version of the model articles governs a company by default. A later amendment to the model articles does not automatically change the articles of a company that was already registered.

How bespoke articles differ

Bespoke articles, sometimes called tailored or amended articles, are a set that a company registers or adopts in place of, or in addition to, the standard default. Section 19 confirms that a company may adopt all or any of the provisions of the model articles, so a bespoke set can keep much of the standard wording and change only the parts that matter to the business. It can equally be a fully drafted document written from scratch.

The legal effect is the same in one important respect: whether your articles are standard or bespoke, they bind the company and every member. The difference is in what they say. Model articles are written to suit a straightforward company with a simple share structure and a small number of directors and shareholders. Bespoke articles let founders and investors set out arrangements that the model articles do not provide, or that they provide in a way that does not suit the business.

Adopting bespoke articles costs more than accepting the default, because someone has to draft and check them, and there is more scope for error if they are not prepared carefully. The benefit is control. A well drafted bespoke set can prevent disputes by making the rules explicit before there is any disagreement about who decides what.

Common reasons to adopt bespoke articles

Different share classes are the most frequent trigger. The model articles for private companies limited by shares assume a single, ordinary class of shares. If you want to create classes with different rights, for example non voting shares for employees, preference shares for investors, or alphabet shares that let you pay different dividends to different shareholders, you generally need bespoke provisions to set out those rights clearly.

Directors' powers and appointment are another common reason. Founders may want to guarantee a particular person a seat on the board, weight certain decisions, require unanimity for reserved matters, or restrict what the board can do without shareholder approval. Investors frequently ask for these protections as a condition of putting money in, and they usually sit in the articles rather than being left to the default rules.

Decision making and share transfers round out the list. Companies with more than one shareholder often want pre emption rights on transfers, drag along and tag along provisions, deadlock mechanisms, or specific rules on how quorum and voting work at meetings. Companies limited by guarantee, such as clubs and community organisations, commonly need bespoke articles because their purpose and membership rules differ from those of a company built to distribute profit.

How to adopt or amend articles

You can adopt bespoke articles at the point of incorporation by submitting them with your application to register the company, rather than relying on the section 20 default. If you decide to change your articles after the company has been formed, the Companies Act 2006 sets a clear route. Section 21 provides that a company may amend its articles by special resolution, which requires the approval of holders of at least 75 per cent of the votes cast.

Once the amendment takes effect, section 26 requires the company to send the registrar a copy of the articles as amended not later than 15 days after the amendment takes effect. Missing this deadline is an offence committed by the company and every officer in default, and it carries a fine, so the filing is not optional. Section 26 does not require you to restate any model article provisions that apply by default or by adoption; you file the amended articles you have actually adopted.

The practical sequence is to draft the change, pass the special resolution at a general meeting or by written resolution, keep a copy of the resolution, and file the amended articles at Companies House within the 15 day window. Because articles are binding and difficult to unwind, it is worth getting the drafting right the first time, particularly where share rights or director powers are involved.

Model articles or bespoke: how to decide

For a single founder or a small group of equal shareholders running a simple business, the model articles for private companies limited by shares are usually enough. They are free, they apply automatically under section 20, and they cover the standard machinery of running a company. There is no need to pay for bespoke drafting if the default already reflects how you intend to operate.

You should look seriously at bespoke articles when your structure moves beyond the simple case. Multiple share classes, outside investors, agreed protections for particular directors, restrictions on share transfers, or an organisation limited by guarantee are all signals that the default may not fit. The table below summarises the trade offs so you can weigh cost against flexibility.

Whichever route you choose, remember that your articles are a live document. As the company grows, takes on investment, or brings in new shareholders, the default that suited you at incorporation may need to change through the section 21 and section 26 process. Reviewing the articles at each major milestone is a sensible discipline.

Conclusion

Model articles are the standard default rulebook prescribed by the Companies (Model Articles) Regulations 2008, and under section 20 of the Companies Act 2006 they apply automatically to fill any gaps in a limited company's constitution. For many small companies with a simple share structure, that default is perfectly adequate and there is no reason to pay for anything else.

Bespoke articles earn their cost when the standard rules do not match how a business shares control, issues shares, or protects its investors and directors. If you decide to change your articles, do it properly: pass a special resolution under section 21, then file the amended articles with the registrar within 15 days as section 26 requires. Getting the articles right early, and reviewing them as the company evolves, is one of the cheapest forms of dispute prevention available. If you want help incorporating with the right articles, our company formation service and team can guide you through the options.

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