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Product ID: UK-CPart08

Suitable for use in: England & Wales and Scotland

£56.40 inc VAT
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Product ID: UK-CPart07

Articles of Association: lender or investor requires protection

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This document is suitable for a trading company with a simple structure that has a minority shareholder or large lender-investor.

You may be an advisor looking to protect the lender-investor or make a proposal on behalf of the company.

The lender-investor may be a director, but we have assumed that he prefers to be uncommitted to management and to rely on these strong articles to protect him.

This version provides a reasonable, practical and balanced framework to manage and control the company, while protecting the lender-investor.

Although it is unlikely that an influential shareholder will want to be a director, many investor organisations will want board representation. We have provided an option for one or more directors to “represent” one of more shareholders and prefer their interest to the interests of the other shareholders - so far as it is possible by law to do this.

Example situations in which to use this version:

  • A company raises money under terms whereby the lender also takes an equity interest, but most likely does not wish to appoint a director on account of the responsibility that comes with that appointment.
  • A large shareholder who has probably controlled the company, now retires but wants to be sure the smaller interest he has retained, is still “safe” from unexpected activity by the remaining directors.
  • A family dispute ends with agreement for one side to operate the company and the other side to retain shares but not be involved in the management.
  • Any other influential shareholder who does not want day to day involvement.
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Suitable for use in: England & Wales and Scotland

£56.40 inc VAT
(£47.00 ex VAT)
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Product ID: UK-CPart11

Suitable for use in: England & Wales and Scotland

£58.80 inc VAT
(£49.00 ex VAT)
Create articles of association for your company online
Answer simple questions in our web-based questionnaire
We create a document tailored to your requirements
Our detailed lawyer review process ensures that your document matches your instructions
We e-mail your document to you
Get Started

Price: £18.00 ex VAT (£21.60 inc VAT)

Suitable for use in: England & Wales

When you use our online service, our software creates your document for you as soon as you have finished answering a questionnaire about the company and how it will be operated.

The questionnaire takes about 20 minutes to complete.

We save your answers every time you move to a new page, so if you want to take a break at any point (for example, you want to check options with shareholders), you can return later without having to start from the beginning.

When you have completed the questionnaire, you can choose for your agreement to be e-mailed to you immediately in Microsoft Word format (compatible with many different word processors), or you can arrange for an experienced lawyer to review your document so that you have confidence that it is legally sound.

If you choose our review service, we aim to check your template and return it to you within 72 hours.

Suitability for your company

This service can produce articles of association for private limited companies that:

  • operate a standard trading business.

  • have one or more investors who have made a significant debt investment (in addition to an equity investment) and who require additional protection for their position as a lender through ownership of a second class of shares with special rights attached.

  • have a single shareholder who is also the only director.

  • are owned by two shareholders who want to control it with equal power.

  • have multiple classes of shares (e.g. preferred, deferred, or convertible) in addition to ordinary shares.

  • have been set up to manage long leasehold residential property, and whose shareholders are the owners of the leases of individual flats or parts of the property.

Note: Our online service should not be used to create articles for public limited companies or companies limited by guarantee.

Why it is important to use customised articles for your company

The word “article” means much the same as “paragraph” or “provision”. Articles of association are the legal constitution of the company, which set out how the company will be managed by the directors on behalf of the owners.

It does not matter what business is operated by your company. Articles are the frame in which you can place any picture - the rule book for operating your company.

The framework provided in these sets of documents is based on the model articles provided by the Companies Act 2006. That act freed us from the longstanding straight jacket of a document few people dared to edit. Now a company can operate under the structure best suited to achieve its objectives, rather than being bound under the same rules as every other company.

The Companies Act 2006 replaced Table A(under the Companies Act 1985) with the “model” articles, effectively a simplified and more modern version of Table A, which have become the default for companies incorporated after 1 October 2009.

However, the problem remains that these are very unlikely to suit your company. They are simply the default that someone has decided is the best compromise for most businesses. There are many additions and omissions that are unworkable or impractical for a private company.

Yet they are the rules by which you must operate. So if you want to work by different rules, you need to customise these as per your structure.

As a company grows, how it is operated changes. New directors might be appointed, the objectives of the business might evolve, or how the company is financed might change.

To avoid having to change your articles frequently, it is also sensible to draw them in ways that suit how your company might be operated in the next few years, not just what you need today.

About our sets of documents

Net Lawman offers various alternatives - each covering different scenario, creates a unique structure.

Within a document, every individual article has been drawn with great care, not only as a standalone “rule” but to tie in with the other articles so as to produce a seamless constitution for your company.

As with all our documents, the drafting notes give you our comments on every provision and make it very easy for you to edit to your precise requirement.

For more detailed information,  you can read structuring your company through your articles which explains in more detail.

What you will find in your document

All of these sets of articles:

  • are suitable for incorporating a new company or for changing an existing company
  • are not specific to any particular industry
  • contain modern provisions in plain English
  • allow you to construct your articles of association to suit your exact needs
  • are full of practical and commercial help and suggestions
  • include draft minutes of directors' and members' general meeting to change the articles (Free bonus)

Other documents you need

You should also put in place a shareholders’ agreement and director’s service contracts.

Within the framework that the articles set out, you need to set more detailed rules for the relationships between directors and shareholders.

Articles of association can be changed - but only with the consent of at least 75% of the shareholders. In most companies, the articles are changed extremely rarely.

In the future, when someone wants to sell his shares or a new director is appointed, you will want to be able to change who does what, without having to change your articles of association. All of that detailed control is best exercised through a shareholders agreement.

In the unlikely event that your company fails, as a shareholder you will probably lose everything. However, there is an exception.

In a winding up, certain payments to employees are priority creditors. That includes money due to a director. It follows that a director’s service contract can provide strong protection and may enable a director to claim a more substantial sum of money that might otherwise be possible. You should also consider putting in place strong service contracts if you have not already.

Why choose Net Lawman

Immediate delivery of the document template by e-mail after checkout
DocX file format compatible with all popular PC & Mac word processing software. We can convert into other formats for you
Use of plain English makes our documents easy to edit and understand
Detailed guidance notes explain the purpose of each paragraph and how to edit
Review service available - a Net Lawman lawyer can check your edited document
Full money back guarantee if the document isn't right for you
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