Article reference: UK-IA-CP24

Articles of association for a company owned by a husband and wife

As for any private limited company, the articles of association for a business jointly owned by a husband and wife team must be drawn carefully.

However, before considering what should be in the articles, you should consider the shareholders’ agreement. This document lies, so to speak, on top of the company articles providing a framework of how the owners of the company have agreed to devolve day to day decision making power to the directors.

Once you are happy with the ownership structure, you can consider how the company articles of association tie in to whole control structure.

Matters you may like to consider are:

  • should you bring in additional shareholders or directors to change the dynamic of decision making?
  • how should disagreement and deadlock be resolved? Should one of the couple have slightly more shares so as to be able to make the decision? Should both owners also be directors?
  • important areas to consider next are: remuneration, dividend policy, quorums, holding meetings and passing resolutions.

Consider your exit strategy if your personal relationship sours

If at some distant time, you choose to live apart in your personal life, this need not affect your business. But of course, it probably would do so.

You can decide now, which of these options to pursue or you can leave them as open choices with no present provision.

  • on breakup, one of you transfers his shares to the other. The company remains as a going concern, but with changed control.
  • your company may buy back your shares. This can be controlled in your shareholders’ agreement, where the company will be a party. Valuation formulae can be included.
  • you can sell the company at arm’s length to a third party of course - or the parties can join the bidding.
  • you could wind up the company - definitely a last resort.

Net Lawman has drawn a set of articles for your company, which you can find here. The basis of the document is to provide as many reasonable checks and balances as possible. You should also look at putting in place a shareholders’ agreement as mentioned above.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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