The Articles of Association form a Contract

Abstract

The Articles of Association form a Contract between parties in the formation of a company. It encompasses all of the components of what is legally an enforceable agreement. While there has been much debate on the topic particularly when there are also shareholder agreements in addition to the Articles, it is settled law that there is a contract between the parties.

The Paper examines the United Kingdom Companies Act 2006 in line with case law which gives insight into the importance of the Articles of Association. The perspective is specifically with a focus on the United Kingdom’s approach. However, its practical application in terms of lessons to be learnt is relevant for many common law jurisdictions.

Having drafted Articles of Association in legal practice, the significance of this for many is not realised unless there is a dispute between the parties and terms in the Articles are examined. In making the argument that there is a contract resulting from this constitutional document case law provides inconsistent opinions.