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When a company is set up with some legal structure, it is customary to draft a set of documents that form the company’s constitution. These define shareholders’ rights and the roles and responsibilities of the directors and senior officers of the company. In the United Kingdom and most of the other countries that were once part of the British empire, the terms used to describe the document are “articles of association.” In some other countries, mainly in the USA and Canada, the terminology is “articles of incorporation” or simple “the Articles,” but these are essentially the same.
The articles of association of a company should also define the company’s business objectives and how business is to be conducted. The format and role of the board of directors, the business’s internal affairs and its manner of achieving the defined business objective are defined.
There are essential differences between the term “corporation” and “limited liability company” in US federal and state law. A limited liability company (LLC) is a business structure that can combine the limited liability of a corporation with the taxation obligations of a partnership or sole proprietorship. It is not a corporation but rather is a legal entity that provides limited liability to its owners in many jurisdictions. A business that registers as a limited liability company (llc) does not have to have articles of incorporation. Instead, it must file Articles of Organization.
Articles of Association vs. Articles of Incorporation
The formal documents filed with a government office to legally register the creation of a corporation or company are termed its Articles of Incorporation in North America, and Articles of Association mainly in the rest of the English-speaking world. They may also be called the corporate charter or certificate of incorporation. All are essentially the same, describing the relationship between shareholders and directors, voting rights of shareholders, regulations relating to share capital etc.
For over 100 years, before 2009, private companies registering as limited liability entities in the United Kingdom could use a template of model articles of association known as Table A. These have since been simplified and modernised under new legislation known as Companies Act 2006 Model Articles which came into force on 1 October 2009.
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