Ensuring your company’s key constitutional document supports today’s governance, strategy and structure
The Governance Backbone
The Articles of Association (AoA) form the legal and operational backbone of a company. They govern everything from director appointments and decision-making protocols to shareholder rights and delegation frameworks. For Company Secretaries, the AoA is not just a legal document—it’s a live framework that shapes how governance operates in practice.
Yet many FTSE 350 companies are still operating with outdated articles—some of which pre-date the Companies Act 2006 or still refer to legacy provisions like Table A. In the fast-moving world of corporate governance, this creates friction, risk, and misalignment between legal structures and operational reality.
When Structure Starts to Strain
Despite their importance, Articles of Association are often reviewed reactively—triggered by a transaction, legal issue, or AGM deadline—rather than proactively aligned with how the company actually functions. This creates several problems:
- Outdated References: Many AoAs still refer to repealed legislation or legacy provisions, such as Table A or pre-2006 Companies Acts.
- Compliance Gaps: Modern requirements like The Mental Health (Discrimination) Act 2013 or ESG-related expectations may not be reflected.
- Restrictive Governance: Provisions that once made sense—like large quorum requirements or rigid delegation rules—may now constrain the business.
- Inflexibility in Strategic Execution: In a volatile environment, companies need agility. Static and inflexible articles can create operational bottlenecks or restrict leadership from adapting quickly.
- Misalignment with Group or Shareholder Structures: Articles may ignore broader group delegation frameworks, which can cause confusion, or fail to clearly articulate shareholder rights—especially in multinational or PE-backed structures.
- Process Blind Spots: The actual mechanics of updating articles—how approval is secured, how shareholders are engaged—can be misunderstood or underestimated, risking pushback or delay.
Most importantly, outdated AoAs can expose the company to reputational and legal risk—especially if decisions are challenged or governance practices don’t align with what’s on paper.
How can Company Secretaries ensure their Articles of Association are fit for purpose—legally sound, operationally relevant, and strategically aligned?
Leading Company Secretaries are taking a proactive, strategic approach to reviewing and modernising their Articles of Association. Here’s how they’re doing it:
1. Start With a Governance Audit: What Do the Articles Actually Say?
Before rewriting or redrafting, conduct a structured review:
- When were the articles last updated?
- Do they still refer to Table A or pre-2006 Companies Acts?
- Do they reflect current legislation, such as the Mental Health (Discrimination) Act 2013?
- Are they in line with the UK Corporate Governance Code?
Tip: Create a cross-functional working group (Legal, CoSec, Risk) to map current articles against evolving business practices and legal requirements.
2. Assess Fit for Purpose: Do the Articles Match How the Company Actually Works?
Articles should support—not hinder—the business.
Ask:
- Do board and shareholder provisions reflect current decision-making processes?
- Are quorum and voting thresholds reasonable and practical?
- Are roles and authorities (directors, committees, management) clearly defined?
- Are any provisions overly rigid or no longer relevant?
Tip: Use real examples (e.g. delays in director appointments, escalations that stalled) to test the articles against reality.
3. Align Articles with Strategic Goals and Organisational Structure
Articles should not just be legally accurate—they should enable long-term value creation.
Key considerations:
- Do the articles support the company’s strategic direction (e.g. global expansion, digital transformation)?
- Are group-level governance models or delegation frameworks reflected?
- Are shareholder rights clearly and appropriately defined for your ownership structure?
Tip: Involve other functions, such as those involved in developing corporate strategy, or investor relations teams to ensure future proofing.
4. Build in Flexibility for the Future
Static articles quickly become outdated in dynamic markets.
Ensure the articles:
- Allow for virtual or hybrid AGMs if appropriate
- Are broad enough to support changes in capital structure, leadership models or regulatory priorities
- Avoid unnecessary prescriptiveness that may require frequent re-approval
Tip: Balance legal precision with practical adaptability—especially around director powers, ESG responsibilities, and stakeholder engagement.
5. Prepare for the Process: Updating Articles Requires Shareholder Buy-In
This is often where governance teams hit delays.
- Understand the process for amendment (usually via special resolution)
- Plan timelines to align with AGM or EGM cycles
- Prepare a clear explanatory note for shareholders, highlighting why the changes are needed and how they benefit the company
Tip: Engage with key shareholders or proxy advisers early—especially if you’re making material changes.
6. Establish a Regular Review Cycle
Articles shouldn’t sit on a shelf for a decade.
- Set a review cadence (e.g. every 3–5 years)
- Use changes in the company’s structure, risk profile, or environment as natural triggers for review
- Include the articles in broader governance effectiveness assessments
Tip: Document the rationale for any changes and keep a version-controlled archive for future reference.
Your Articles Should Reflect the Company You Are—And the One You’re Becoming
The Articles of Association are more than a legal requirement. They are a strategic governance instrument—one that must evolve alongside the company’s risks, ambitions, and stakeholders.
For Company Secretaries, modernising the articles is not just about compliance. It’s about ensuring the legal foundation supports the company’s growth, resilience, and reputation.
Is your governance foundation still fit for today’s FTSE 350 reality?
We work with governance leaders to review and modernise Articles of Association—ensuring legal accuracy, operational relevance, and strategic alignment.
Get in touch for a confidential review or to benchmark your articles against current best practice.
