Incorporation & Articles of Association. Why these matter
Why The Good Stream puts its Articles of Association at the heart of its governance & decision making.
After months of thought we are now a registered UK business. As part of the start-up process we decided to write bespoke Articles of Association [Articles].
A set of well considered Articles are one of the foundational governance and decision making guides for businesses and organisations. A rule book of sorts (although written in legalese)
In UK law there are very few options for incorporation of a new UK company;
Reference taken from GOV.uk website.
- Private company limited by shares: This company has a share capital and the liability of each member is limited to the amount, if any, unpaid on their shares. A private company cannot offer its shares for sale to the general public.
- Private company limited by guarantee: This company does not have a share capital and its members are guarantors rather than shareholders. The members’ liability is limited to the amount they agree to contribute to the company’s assets if it is wound up.
- Private unlimited company: An unlimited company may or may not have a share capital but there is no limit to the members’ liability.
- Public limited company: A public company has a share capital and limits the liability of each member to the amount unpaid on their shares. It may offer its shares for sale to the general public and may be quoted on the stock exchange. There is further information about public companies.
In a recent research paper by Re-generate.org they identified four core areas that are ‘holding back’ purpose led businesses. Number 2 on the list in their finding was ‘incorporation’ – In the UK “It is not clear how a company can be legally set up in a manner consistent with being purpose-driven”. For this reason we spent a lot of time researching and considering what type of incorporation we would use and our Articles.
We chose to be a Private Company Limited by Guarantee
The Good Stream is, fundamentally, a network of people, businesses, organisations and ideas for the present and future benefit of all. It was not conceived as a monetary value creation and extraction shareholding business, although we have no intrinsic objection to this in principle. As we say, we are ‘changing the nature of business for good’. A business focussed on transformation and one that will need a network, one that draws on the source of many streams of expertise. An expertise that is bigger than the activity of one individual or one business as we work toward our purpose, where profit is made to further the goals of our business purpose.