Determining whether your company will be publicly traded or privately owned is one of the most important decisions you will make for your company. There are many benefits to having a publicly traded company, however you relinquish much control of your company to the shareholders. One thing that determines how the relationship between your company and your shareholders is structured if you live outside of the United States is the articles of association.
In the U.S., there is an equivalent set of documents called the articles of incorporation, however they differ slightly from the articles we are talking about now. The United Kingdom has been filing articles of association since 1868 as a way to solidify and clarify shareholder's rights and relationship with the company they are supporting, it is important to make these documents clear and fair, as they reflect your business in the same way any communication with people outside the company would. Also, once filed, the articles of association for your company cannot be changed at will unless stated in the document that such changes are possible, and it is generally unwise to impose this on your shareholders. Normally, the articles of association can only be changed if there is a consensus among the board of directors that such a change is in the company's, and therefor the shareholder's, best interest. As important as these articles are, it should come as no surprise that the United Kingdom actually requires their filing as part of the process to become and incorporated company. When filing articles of association in the UK, it is important to include such information as share capital, issue of shares, transfer and transmission of shares, powers of directors, and the names and number of directors.
Even a privately traded company must file articles of association for private companies. These articles also outline the power of directors, appointment of directors, and other information like shareholder power and transmission of shares. Articles of association forms are a little more complicated than forms for things like articles of organization. Usually you need to draft several pages to cover all of the information necessary, so you may need to request the services of a business attorney to effectively outline and draft your articles of association. Regardless of how you decide to handle the document, you will need to start with a definitions section, where you outline how you will be referring to such items as the company it's self, the shareholders, and those in charge of running the company, as well as any other people or things that you will be mentioning in the articles. This is a serious step to incorporating your business, so take it seriously, and do it right, and you will have taken an important step in shaping your business' future.