When starting a corporation in the United Kingdom, a certain set of bylaws set forth between members and managers of a business need to be created. Bylaws in a UK company are typically known as the articles of association, which represent the rules and administrative provisions that govern the internal structure of the corporation and regulate the way that its internal affairs are governed. Articles of association are superseded only by the memorandum of association and the law of jurisdiction of incorporation. What this will do is allow business owners to have a written document proving that all relevant parties have agreed upon the rules and regulations set in place. This document will prove useful when future disputes between members arise. Within this agreement there are a number of important provisions defined that were previously left undocumented. Both a memorandum of association and articles of association are required for a company formed in the UK under the Companies Act 2006 and previous Companies Acts. It is recommended that founders work with a lawyer to draft their articles of association. Official examples and templates for writing articles of association are listed here. Articles of association typically include sections with information about:

• Liability of members
• Directors’ powers and responsibilities
• Directors’ meetings, voting, delegation to others and conflicts of interest
• Retaining records of directors’ decisions
• Appointment and removal of directors
• Shares, unless a limited by guarantee company
  • Issuing shares
  • Different share classes
  • Share certificates
  • Share transfers
• Dividends and other distributions to members
• Members’ decision making and attendance at general meetings
• Means of communication
• Use of the company seal, if applicable
• Directors’ indemnity and insurance

After forming a corporation, a business must undertake certain steps on an ongoing basis to keep itself in compliance. You must keep records about the company itself, as well as financial and accounting records. This includes the following requirements:

• Records about the company
  • Details of directors, shareholders, and company secretaries
  • Results of any shareholder votes and resolutions
  • Promises for the company to repay loans at a specific date in the future (debentures) and who they must be paid back to
  • Promises the company makes for payments if something goes wrong and it is the fault of the company (indemnities)
  • Transaction when someone buys shares in the company
  • Loans or mortgages secured against the company’s assets
  • Register of people with significant control, which includes details of anyone who:
    • Has more than 25% shares or voting rights in your company
    • Can appoint or remove a majority of directors
    • Can influence or control your company or trust
• Accounting records
  • All money received and spent by the company
  • Details of assets owned by the company
  • Debts the company owes or is owed
  • Stock the company owns at the end of the financial year
  • Stocktakings used to work out the stock figure
  • All goods bought and sold
  • Who you bought and sold them to and from
  • Any other financial records, information, and calculations used to prepare and file your annual accounts and Company Tax Return
    • All money spent by the company (receipts, petty cash books, orders, and delivery notes)
    • All money received by the company (invoices, contracts, sales books, and till rolls)
    • Any other relevant documents (bank statements and correspondence)
  • You can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records
• How long to keep the records? What if they are lost, stolen, or destroyed?
  • Records must be kept for 6 years from the end of the last company financial year they relate to, or sometimes longer (depending on certain criteria)
  • If you cannot replace your records after they were lost, stolen, or destroyed, then either recreate them, tell your Corporation Tax office, or include this information in your Company Tax Return

Sources:

• TransLegal: A Corporation’s Charter and Bylaws
• Memorandum and Articles of Association Explained
• Model Articles of Association for Limited Companies
• Running a Limited Company
• PSC Requirements for Companies and Limited Liability Partnerships
• Accounts and Tax Returns for Private Limited Companies