The Articles of Association regulate the way a company is administered. While the Articles do not usually address matters of day-to-day management, they will govern such fundamental matters as the issue of new shares, the procedures surrounding shareholder decisions and board meetings, and appointment of directors. They may also provide for restrictions on sales of shares, or set out circumstances in which a shareholder might be forced to sell his shares. We are well capable though our past and present work in such matter.
The sorts of issues that might commonly be addressed in a company’s Articles are:
- Restrictions on shareholders selling their shares. Without such restrictions, a shareholder can freely sell his shares, which might result in the remaining shareholders being in business with someone they do not know or approve of;
- The ability to force minority shareholders to sell their shares to someone to whom the majority have agreed to sell the company;
- The ability for a minority shareholder to block the sale of the majority’s unless the buyer also buys the minority’s shares;
- Restrictions on the issue of new shares, which could change the proportions in which shareholders own the company, or bring in new shareholders, thus diluting the existing shareholders’ interest in the company;
- The minimum or maximum number of directors of the company;
- Provisions for how directors meetings are to take place;
- Provisions setting out shareholders can make decisions.