Google Adwords 0808 278 1398 Bing Ads 0808 274 4482

Is it better to include key terms in the company’s articles of association or a separate shareholders agreement?

Typically a company’s articles of association cover the main administrative issues: for example, how directors are appointed, the voting procedure at shareholder or board meetings, and how shares are transferred.

A shareholders agreement can cover similar ground but often also looks at broader issues, such as how the company is funded, what the policy is on paying dividends, what happens if someone offers to buy the company and so on.

Often there is a choice whether to include particular terms in the articles of association or in a shareholders agreement. Each can be effective, but there are differences. For example:

  • If the shareholders are likely to change frequently, you may want to include key terms in the articles of association. A shareholders agreement only binds those individuals who agree it at the time, whereas the articles continue to govern how the company is run regardless of who the shareholders are.
  • Unless otherwise agreed originally, a shareholders’ agreement can only be changed unanimously. Changes to the articles can usually be made by special resolution (with the agreement of 75% of votes cast) unless the articles include extra restrictions.
  • The articles of association are a public document whereas a shareholders agreement can be kept confidential.

Your lawyer can advise you on which terms it is best to include in each.

Related FAQs

Have a question or need some help? Call us today on 08082747557

For free first advice when you want it,
fill in the form below

Please let us know you are not a robot

Your local legal experts


Why QualitySolicitors?

With QualitySolicitors your first initial assessment is free, so you can call us without worrying about being charged for a call you might not have actually needed to make. And because we place our clients are at the heart of everything we do, we make these five customer service promises to make sure you'll feel properly looked after.

This is why, in the first instance, most people looking for legal help in relation to a 'Home And Property' call QualitySolicitors for a Free Initial Assessment over the phone before requesting our Ask the Legal Expert service; which is an introductory 45-minute face-to-face consultation for £99.