Do Shareholders Need to Approve Changes to the Articles?

Yes. Changes to a UK company’s Articles of Association must normally be approved by its shareholders through a special resolution.

A special resolution generally requires at least 75% of the relevant shareholder votes. Directors can propose changes, but they cannot usually amend the Articles without shareholder approval.

What Is a Special Resolution?

A special resolution is a formal shareholder decision used for significant company changes.

Under section 21 of the Companies Act 2006, a company may generally amend its Articles by special resolution.

The resolution can approve:

• Changes to individual clauses
• The removal of existing provisions
• The addition of new provisions
• A completely new set of Articles

The proposed amendments should be clearly identified before shareholders are asked to vote.

What Percentage of Shareholders Must Approve?

A special resolution normally requires at least 75% approval under the applicable voting procedure.

The calculation is based on voting rights rather than simply the number of individual shareholders.

For example, if one shareholder owns 80% of the voting shares and another owns 20%, the shareholder with 80% may normally be able to pass the special resolution alone. However, the existing Articles, class rights and any shareholders’ agreement must also be checked.

Must Every Shareholder Agree?

No. Unanimous approval is not normally required.

A change can generally be approved when the special-resolution threshold is met, even if some shareholders vote against it.

However, unanimous or additional approval may be required when:

• The Articles contain an entrenched provision
• A shareholders’ agreement requires unanimous consent
• The change affects rights attached to a particular share class
• The amendment increases a shareholder’s liability
• A court, regulator or specific law imposes additional requirements

The company should therefore review all relevant documents before holding the vote.

Can Shareholders Approve the Change in Writing?

A private limited company can normally pass a written special resolution without holding a shareholder meeting.

The written resolution must be circulated to eligible shareholders and approved by shareholders representing the required voting rights.

The company should keep:

• A copy of the written resolution
• Evidence of each approval received
• The voting calculation
• The final amended Articles
• The date the resolution was passed

Public companies cannot use the statutory written-resolution procedure available to private companies.

Can the Resolution Be Passed at a Meeting?

Yes. The company can call a general meeting and ask shareholders to vote on the proposed changes.

The company must follow the correct procedures relating to:

• Notice of the meeting
• Eligibility to vote
• Proxy voting
• The meeting quorum
• The required majority
• Recording the voting result
• Preparing meeting minutes

At least 75% of the votes cast must normally support the special resolution.

What If the Company Has One Shareholder?

A sole shareholder can normally approve the amendments by passing a written special resolution.

Even though only one person is involved, the company should still:

• Prepare the resolution
• Record the shareholder’s approval
• Produce the complete amended Articles
• Update its statutory records
• Complete the required Companies House filings

The formal process should not be skipped merely because the company has one shareholder.

What If the Company Has Different Share Classes?

Additional approval may be required if an amendment affects rights attached to a particular class of shares.

Class rights can include:

• Voting rights
• Dividend rights
• Rights to capital
• Redemption rights
• Conversion rights
• Director appointment rights

The holders of the affected class may need to provide separate consent. Additional Companies House filings may also be required.

In certain circumstances, shareholders who did not consent to a change in their class rights may apply to the court to have the variation cancelled.

What Are Entrenched Provisions?

Entrenched provisions are clauses that can only be changed when additional conditions are satisfied.

For example, an entrenched clause may require:

• Unanimous shareholder approval
• Approval from a named shareholder
• Consent from a specific share class
• A voting majority higher than 75%

The company must follow the entrenchment requirements as well as the general special-resolution procedure.

Can Directors Change the Articles Without Shareholder Approval?

Normally, no.

Directors may:

• Recommend the amendments
• Prepare draft Articles
• Call a general meeting
• Circulate a written resolution
• Arrange the Companies House filing

However, shareholders must normally approve the changes by special resolution.

Can a Majority Shareholder Make Any Change They Want?

Not necessarily.

Even when a shareholder controls at least 75% of the votes, the amendment must still:

• Comply with the Companies Act 2006
• Be made in good faith for the benefit of the company
• Respect protected class rights
• Follow any entrenched provisions
• Avoid improperly increasing a shareholder’s liability
• Consider minority shareholder protections
• Comply with any binding shareholders’ agreement

An amendment may be challenged if it is unlawful, improperly discriminatory or unfairly prejudicial to minority shareholders.

What Happens After Shareholders Approve the Change?

After passing the special resolution, the company must normally send Companies House:

• A copy of the special resolution
• A complete copy of the amended Articles
• Any additional forms required by the change

The resolution must normally be filed within 15 days after it is passed, and the amended Articles within 15 days after they take effect, according to Companies House guidance.

The company should also update its internal records and provide the new Articles to its directors and relevant shareholders.

Summary

Shareholders must normally approve changes to a UK company’s Articles of Association by passing a special resolution. This generally requires at least 75% of the relevant votes, although the company’s existing Articles may impose stricter conditions.

Additional consent may be needed when the amendments affect share-class rights, entrenched provisions or agreements between shareholders. Once approved, the company must file the resolution and amended Articles with Companies House—normally within 15 days.

This article provides general information and does not constitute legal advice.

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