Corporate and Business Law (Global) · The formation and constitution of a company

Articles of Association and Model Articles for ACCA LW

Updated 11 October 2026 · Fact-checked

The articles of association are the company's internal rulebook. They set out how the company is run and the rights of members and directors. A company can adopt model articles or write its own. Articles are altered by special resolution, and they act as a contract between the company and its members.

Understand Constitution: Articles of Association and Model Articles

A company's constitution is the set of rules that govern how it operates. The main part is the articles of association. The articles deal with internal management: the powers of directors, how meetings are held, how votes work, how shares are transferred and how dividends are paid.

Many jurisdictions provide model articles, a ready-made standard set. A company can adopt them in full, adopt them with changes, or write its own. If a company registers without its own articles, the model articles usually apply by default. Check the jurisdiction in the question. In the Global variant, answer on general principles unless the question gives a specific rule.

The constitution also includes resolutions and agreements that affect the company's constitution, such as special resolutions and agreements among all members. Do not confuse the articles with the memorandum. In many systems the memorandum is now only a short statement signed by the founders. It says they wish to form a company and agree to take shares. It contains no rules for running the company. Older law used the memorandum to state the company's objects and capital. Do not use that older approach unless the question does.

The articles have contractual effect. They bind the company and its members, and members to each other, in their capacity as members. This is the effect of the statutory contract rule, often cited as section 33 of the UK Companies Act 2006. Cite that section only if the question is UK-based. The contract covers rights that members hold as members. It does not usually give rights to outsiders. A person is not protected by the articles in a different role, such as solicitor, director or employee, unless the rights are also in a separate contract.

The company can alter its articles by special resolution, normally 75% or more of votes cast. Alteration must be made in good faith for the benefit of the company as a whole. The company cannot use alteration to escape a contract by contracting out of damages. It may be liable in damages for breach of a separate contract, but an injunction cannot stop the alteration itself. Some jurisdictions require the amended articles to be filed with the registrar.

Key formulas to remember

Alteration of articles: Special resolution = at least 75% of votes cast; This is the usual threshold. Written resolutions use 75% of eligible votes. Check the percentage the question gives.
Contractual effect: Articles = contract between company and members, and between members; It covers rights as a member only. Outsider rights do not arise from the articles.
Default articles: No own articles registered → model articles apply; Model articles can be adopted fully, partly or excluded.
Test for alteration: Bona fide for the benefit of the company as a whole; A good-faith alteration is valid even if it hurts some members. Fraud on the minority is not allowed.
Filing: Copy of amended articles and special resolution sent to the registrar; Often within a set number of days, such as 15 in the UK. Cite the time limit only if the question gives it.

How to solve Constitution: Articles of Association and Model Articles questions

Use this method for any question on the articles, model articles or their alteration.

1Identify what is asked: content of articles, adoption, alteration, or contractual effect.
2Identify who is claiming and in what capacity: member, director, or outsider.
3State the rule: articles are a contract between company and members, and members to each other.
4Check whether the right is a member right. If the person is claiming as an outsider or in another role, the articles do not give them a right.
5For alteration, state the special resolution threshold and the good-faith test.
6Check for restrictions: class rights, entrenched provisions, or a separate contract.
7Apply the rule to the facts and give a clear conclusion.
8For longer answers, set out rule, application and conclusion in separate short paragraphs.

Quickest way: Capacity and vote check

When to use it: Use this for objective test questions where you have about one minute.

Ask: is the person claiming as a member? If not, the articles do not help them.
Ask: is the question about changing the articles? If yes, look for a special resolution and good faith.
Ask: does the option mention the memorandum for internal rules? Reject it.
Look for the option that states 75% and benefit of the company as a whole.
Reject any option that says the articles bind outsiders or that alteration needs every member to agree.

Common mistakes in Constitution: Articles of Association and Model Articles

Saying the memorandum contains the rules for running the company.
Older textbooks gave the memorandum a larger role.
Fix: Remember that the articles hold the internal rules. The modern memorandum is only a short founders' statement.
Saying alteration needs unanimous consent.
Students confuse articles with ordinary contracts.
Fix: State that a special resolution of at least 75% is enough, subject to good faith and other protections.
Saying anyone can enforce the articles.
The word 'contract' suggests a normal contract with everyone.
Fix: Say that the contract is between company and members and between members. Rights must be held as a member.
Saying a court will always stop an alteration that harms a member.
Students focus on the harm instead of the test.
Fix: Apply the test: good faith for the benefit of the company as a whole. Harm to some members alone does not make the alteration invalid.
Forgetting that model articles apply by default.
Students assume every company must write its own articles.
Fix: State that where no articles are registered, the model articles apply, and that companies may change them.

Worked examples

Example 1

Nadia holds shares in Orion Ltd. The articles say that directors must offer any shares they sell to existing members first. A director sells shares to an outsider without making the offer. Can Nadia enforce the articles?

Show the solution

The articles are a contract between the company and its members, and between members.
Nadia is a member and the right to a first offer is a member right.
The director breached a term of the articles.
So Nadia is claiming in her capacity as a member, which the contract covers.

Answer: Yes. Nadia can enforce the pre-emption term in the articles as a member, because the articles bind members to each other and to the company.

Example 2

Zeta Ltd has 100 votes cast on a resolution to change its articles to allow the company to require a member to sell shares to the majority. 80 votes are in favour and 20 against. The change is made in good faith for the benefit of the company as a whole. Is the alteration valid?

Show the solution

Alteration of the articles requires a special resolution, at least 75% of votes cast.
Calculate the percentage in favour: 80 ÷ 100 = 80%.
80% is above 75%, so the resolution passes.
Check the test of good faith for the benefit of the company as a whole. The facts say this is met.

Answer: The alteration is valid. The special resolution passed with 80% of votes cast, and the change was made in good faith for the benefit of the company as a whole.

Exam tips

In objective questions, test the capacity first. Many wrong options give outsiders rights under the articles.
Quote 75% for a special resolution and name the good-faith test in written answers.
Do not cite section numbers or case names unless you are certain. Rule and application earn the marks.
Always say whether model articles apply by default when the question is silent about articles.
In multi-task questions, set out the rule in one sentence and the application in the next. This keeps the answer clear.

Practice questions from The formation and constitution of a company

Constitution: Articles of Association and Model Articles in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Constitution: Articles of Association and Model Articles: frequently asked questions

What is the difference between the memorandum and the articles of association?

The articles are the company's internal rules for management and members' rights. The modern memorandum is a short statement by the founders that they wish to form the company and take shares. It does not govern how the company runs.

How do you alter the articles of association?

The company passes a special resolution, normally at least 75% of votes cast. The change must be in good faith for the benefit of the company as a whole. The amended articles are then usually filed with the registrar.

What are model articles?

Model articles are a standard set of articles provided by law. A company may adopt them in full, adopt them with changes or write its own. If it registers without articles, the model articles usually apply.

Who can enforce the articles of association?

The articles bind the company and its members, and members to each other. A person can enforce them only for rights held as a member. Outsiders and people acting in other roles generally cannot rely on the articles alone.