Articles of Association: family owner-managed company

This set of articles has been drawn for a trading company where two or more family members or friends run the business together with a large degree of trust in each other.

Suitable for use in: England & Wales and Scotland
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About this document

This set of articles should be used for any new or existing company where you choose to operate business in partnership with a wife, husband, civil partner or someone else very close to you.

The company's business does not matter to the document. You might be running an Internet start-up providing a web-based service, or a local shop selling groceries.

The document is based on the framework of the model articles introduced under the Companies Act 2006. The so called model articles were not intended to be used without editing. There are many rules in the model that are unworkable in the real world. We explain more in our article about editing articles to suit a husband and wife run company.

We have taken advantage of the flexibility that the Companies Act allows to give you a version which is simple and effective - and in plain English of course. So whether you are going into a new venture, or have been working together in partnership and are now incorporating, or whether you just want to update how you work together, these articles should suit.

These articles are for a private company with a simple share structure. Most probably there are two shareholders, both of whom will be directors. Nonetheless, we have provided of the possibility of more, because it is easier for you to leave these provisions dormant now than for you later to have to change the articles, maybe to introduce a new director or hand shares to an employee such as another family member.

So the document provides a balance between letting you to get on with making money, while protecting the interests of both shareholders. It is also suitable for a structure where two shareholders decide to appoint a non-executive director to act as a referee in the event of a dispute. 

The drafting notes with this document are particularly detailed. We give you comments and suggestions on every paragraph.

If you intend to attach specific rights to the shares of each partner then our articles for a company with different classes of shares may be useful.

Other required documents

Articles are the legal constitution of the company. They can be changed - but only with the consent of at least 75% of the shareholders. So you may not want to change them often.

You also should set the rules for the detailed relationships between directors and shareholders. You want to be able change who does what when someone wants to sell his or her shares or when a new director is appointed.

A shareholders’ agreement sits on top of the articles and sets out how the owners will deal with issues of ownership and control outside of day to day decision making.

You should also have directors service agreements (employment contracts) in place.

Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

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