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draft-articles-of-association

Category: Coding Risk: Low risk ★ 3.9 · Rating 3.9/5 (8) sboghossian/mini-claude-for-legal MIT

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name: draft-articles-of-association
description: Use when asked to draft or review Articles of Association (also called a Memorandum of Association, Company Charter, or Statuts in civil-law systems) for a company being incorporated or restructured. Covers the essential provisions — company name, objects, share capital, share classes, transfer restrictions, board structure, and shareholder meeting procedures — with jurisdiction-specific notes for UAE, KSA, Lebanon, Egypt, DIFC, and ADGM.
license: MIT
metadata:
id: draft.articles-of-association
category: draft
practice_area: corporate
jurisdictions: [UAE, KSA, LB, EG, DIFC, ADGM, UK, multi]
priority: P1
intent: [articles of association, memorandum, charter, company formation, corporate constitution]
related: [draft-bylaws, draft-board-resolution, draft-agm-minutes, draft-cap-table-resolution, draft-shareholders-agreement]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Draft — Articles of Association

When to use this

Use this skill to produce the constitutional document for a new company or to amend the constitutional document of an existing company. The Articles of Association (AoA) — variously called Memorandum and Articles (UK), Statuts (French/Lebanese), Nizam Asasi (Arabic) — is the primary governance document that:

  • Creates the company.
  • Defines the rights of shareholders.
  • Governs the board and its powers.
  • Controls how shares are issued and transferred.

In civil-law jurisdictions (Lebanon, KSA, UAE onshore), the AoA is a public document filed with the commercial registrar, typically notarized, and accessible to third parties. In common-law jurisdictions (DIFC, ADGM, UK), the memorandum and articles are filed with the registry.

Required inputs

Input Notes
Company name Full legal name; must be cleared for availability with the registrar
Jurisdiction and entity type UAE LLC / KSA Limited Liability Company / LB SAL / DIFC Company Ltd / ADGM Company Ltd
Registered office address Physical address in jurisdiction; registered agent for some free zones
Objects clause Business purpose — broad vs narrow; see note below
Share capital Total authorized capital; par value per share (if applicable)
Share classes Ordinary, preference, redeemable; rights per class
Initial shareholders Names, nationalities, number/class of shares
Director structure Number, appointment mechanism, term
Governing law Usually the law of the jurisdiction of incorporation

Optional inputs

  • Pre-emption rights mechanism (right of first refusal on transfer)
  • Drag-along and tag-along provisions (especially for VC-backed companies)
  • Reserved matters requiring supermajority
  • Dividend policy
  • Quorum and voting thresholds for shareholder meetings
  • Deadlock resolution mechanism (for 50/50 JVs)

Document structure

Part 1 — Preliminary

  1. Company name — including legal form suffix (LLC, PLC, SAL, Ltd).
  2. Registered office — jurisdiction and address (or registered agent reference for free zones).
  3. Objects — see note on objects clauses.
  4. Liability — members' liability limited to their share capital contribution.
  5. Authorized capital — total share capital; currency; par value.

Part 2 — Shares

  1. Share classes — rights attaching to each class: voting, dividend, liquidation preference.
  2. Issuance of shares — board authority to issue new shares within authorized capital; shareholder approval for issuance beyond authorized capital.
  3. Pre-emption rights — existing shareholders' right of first offer on new issuances and on transfers.
  4. Transfer restrictions — approval mechanism for transfers; prohibited transferees (competitors, etc.).
  5. Drag-along — majority shareholders' right to require minority to sell in an approved exit.
  6. Tag-along — minority shareholders' right to join a majority sale on same terms.
  7. Share certificates (if applicable).

Part 3 — Directors and officers

  1. Board composition — minimum and maximum number; any class-based nomination rights.
  2. Appointment and removal — by shareholders in general meeting; by specific shareholder classes.
  3. Term — fixed term or until removed.
  4. Powers of the board — general management authority; reserved matters requiring shareholder approval.
  5. Board meetings — notice, quorum, voting, minutes.
  6. Officers — CEO, CFO, Secretary; appointment by board; powers.
  7. Conflicts of interest — disclosure obligation; exclusion from vote.
  8. Indemnification — scope and limitations.

Part 4 — Shareholder meetings

  1. Annual General Meeting — timing, notice period, quorum.
  2. Extraordinary General Meeting — triggers; who may convene.
  3. Notice — period (minimum varies by jurisdiction); content requirements.
  4. Quorum — first call vs second call (civil-law jurisdictions typically have two-call mechanics).
  5. Voting — show of hands vs poll; proxy rights; written resolutions.
  6. Supermajority matters — items requiring 75% or higher approval (capital reduction, material asset sale, amendment of articles, liquidation).

Part 5 — Financial provisions

  1. Financial year — calendar year or specified.
  2. Auditors — appointment; mandatory audit threshold.
  3. Dividends — board recommendation; shareholder approval; payment mechanics.
  4. Reserves — statutory reserve (mandatory in most MENA jurisdictions).

Part 6 — Winding up

  1. Voluntary dissolution — shareholder vote threshold.
  2. Liquidator appointment.
  3. Distribution of assets — after liabilities settled; per class rights.

Jurisdictional notes

UAE (Federal Decree-Law 32/2021 on Commercial Companies)

  • LLC: minimum 1 shareholder; maximum 50; no minimum capital (previously AED 150,000); no requirement for UAE national partner in most sectors (significant liberalization post-2020).
  • Mandatory statutory reserve: 10% of annual net profit until reserve equals 50% of paid-up capital.
  • Objects clause: can be broad; must not violate licensed activities.
  • Language: Arabic AoA required for onshore LLCs; dual language (Arabic + English) common; Arabic controls.
  • Filing: notarized and filed with the relevant DED (economic department) or free-zone authority.
  • PJSC (public joint stock company): minimum 5 founders; minimum AED 30 million capital; more rigorous governance requirements.

UAE Free Zones (DIFC / ADGM)

  • English-language AoA.
  • DIFC: DIFC Companies Law (DIFC Law 5/2018); DIFC Registrar of Companies.
  • ADGM: ADGM Companies Regulations 2020; ADGM Registration Authority.
  • Common-law principles govern interpretation; English-style articles acceptable.

KSA (Companies Law — Royal Decree M/132 2022)

  • LLC: minimum 1 shareholder; minimum capital SAR 500 for single-member, no minimum for multi-member (recent reform).
  • Arabic is the required language; English translation for international parties.
  • Notarization: AoA must be notarized and registered with Ministry of Commerce (Mawthq platform).
  • Sharia compliance: objects clause must not include prohibited activities; certain financial structures require Islamic finance structuring.
  • Foreign ownership: generally 100% foreign ownership now permitted in most sectors under Vision 2030 reforms; sector-specific restrictions remain.

Lebanon (SAL — Société Anonyme Libanaise / SARL)

  • SAL: minimum 3 founders for formation; minimum capital LBP (amount periodically updated; effectively modest in USD terms).
  • Statuts: in Arabic and French (or Arabic alone); filed with the Commercial Register.
  • Notarization: required for SAL formation; notary fees significant.
  • SARL (limited liability): fewer formalities; single-member possible; maximum 20 members.
  • Mandatory legal reserve: 10% of annual profits until reserve = 50% of capital.

Egypt (Companies Law — Law 159/1981 and Investment Law 72/2017)

  • SAE (Société Anonyme) and LLC (LLC under Law 159/1981).
  • Minimum capital requirements vary by sector.
  • Notarization and filing with GAFI (General Authority for Investment and Free Zones) or commercial register.
  • Arabic required; English translation acceptable alongside.

Objects clause — drafting note

Broad objects clause (preferred for most commercial companies): covers all lawful commercial activities; maximum flexibility. Common in common-law jurisdictions: "The Company may carry on any lawful business or activity."

Narrow objects clause (required in some regulated contexts or by local law): lists specific activities. Common in UAE/KSA where the license specifies the permitted activity and the AoA must mirror it.

Risk of narrow objects: any activity outside the stated objects is ultra vires — legally beyond the company's capacity. Err on the side of breadth.

Common mistakes

  • Objects too narrow: company outgrows its objects and cannot contract for new activities without an AoA amendment.
  • Missing pre-emption rights: without them, a shareholder can transfer to any third party; important for closely-held companies.
  • No supermajority for material decisions: if articles are silent, ordinary majority controls everything — including diluting minority shareholders.
  • Statutory reserve omitted: mandatory in UAE, KSA, LB, EG; failure to include does not invalidate AoA but creates regulatory non-compliance.
  • Conflict between AoA and shareholders' agreement: these must be read together; inconsistencies create legal uncertainty. Always review the SHA when drafting AoA.
  • [[draft-bylaws]]
  • [[draft-board-resolution]]
  • [[draft-agm-minutes]]
  • [[draft-cap-table-resolution]]
  • [[draft-bilingual-ar-en-side-by-side]]