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The Life of a Company

Amending Articles of Association

It is not permissible to create company articles that are unalterable. Any clause in the articles which aims to prevent shareholders from altering the articles will be held to be invalid. However, an agreement between shareholders as to how they will vote on a resolution to alter the articles is not void (Russell v Northern Bank Development Corporation [1992] 1 WLR 588).

S21 of the Companies Act 2006 gives a company a general power to alter its articles by special resolution. S22 however permits companies to entrench provisions in their articles, either on formation of the company, or later with the approval of all members of the company. Under s22 companies can create mechanisms for change within their articles which are more restrictive than simply obtaining a special resolution. Therefore, although it is not permissible for companies to make clauses unalterable, this can make change very difficult to effect in practice.

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