Articles of association review for multi-jurisdiction boards

An articles of association review checks whether a company's constitutional documents still describe how its board of directors actually operates, and whether that description still matches the law of the jurisdiction where the company sits. In a cross-border structure this rarely holds after the first two or three years. The parent's constitution gets copied into a new entity, a director is added or removed under a process different from the one on paper, and nobody goes back to reconcile the two. The review sets out where the constitutional documents and the board's practice have drifted apart, and what each gap exposes the company to.

A group parent amends its own articles to add a reserved matter requiring board approval for related-party transactions above a defined threshold. It assumes the change flows through to every subsidiary automatically. It does not. Each subsidiary's constitution is a separate instrument, filed with a separate registry, amended by a separate resolution under its own jurisdiction's rules. Six months later a subsidiary board approves a related-party loan the parent's own policy would have blocked.

This page sets out when the review becomes necessary, what it produces in sequence, and what the engagement does not extend to under the firm's advisory perimeter.

The situation this work addresses

Most groups do not read a subsidiary's articles of association again after incorporation unless something forces the question. The forcing event is rarely dramatic. A director resigns and the removal clause turns out to require a majority nobody expected. A shareholder wants to block a share issue and finds the pre-emption right was drafted for a two-shareholder company that has since become five. The constitutional documents were correct on the day they were filed. What changes is the board of directors sitting above them, the ownership structure they were written for, and the transactions the group now wants to run through the entity.

For a company that sits inside a wider structure – a joint venture entity, a subsidiary with a co-investor, a holding company with more than one shareholder class – the articles are doing real work. They set quorum. They allocate reserved matters between the board and the shareholders. They fix how a deadlock is resolved if the two sides cannot agree. A reserved matters framework built for group subsidiaries only holds if the document at each level of the structure says what the group intended it to say, not what a template happened to include.

The review is the same exercise wherever the entity is incorporated, though what it turns up differs by jurisdiction. A jurisdiction-specific version of this review, for companies incorporated in the Abu Dhabi Global Market, works through the same three questions applied to that register's own drafting conventions: what the constitution currently says, what the board is actually doing, and where the two no longer agree.

What triggers it and why the timing matters

The review is usually commissioned around an event, not a calendar date. A new co-investor is joining and wants the constitution checked before signing. A cross-border restructuring is moving an entity from one jurisdiction to another and the constitution has to be rebuilt for the new register. A board resolution has already been passed on the assumption that the existing quorum rule applied, and someone now wants to confirm that assumption before the statutory filing that gives the resolution effect is made. In each case the timing question is the same: is there still a window in which a gap can be corrected cleanly, or has the group already acted on the document as it stands.

Once a board resolution amending the articles is filed with the registry, the right to challenge the process by which it was passed – on the grounds that the wrong quorum voted on it – closes off for any shareholder who does not act before the filing takes effect. After that point, the remedy runs against the outcome, not against the process, and the outcome is harder to unwind than the vote that produced it.

A restructuring, a new investor, or a director change are the three events that most often surface a gap the group did not know it had. None of them announce themselves as a constitutional problem. They present as a transaction, and the constitution only becomes relevant once someone has to sign against it.

A board that discovers, after an amendment has already been filed, that the removal clause required a majority nobody used is left with a document that other shareholders will read literally. Confirming what the appointment and removal provisions actually require, before relying on them, is the point at which the gap can still be fixed rather than only described.

Review your appointment terms Write to info@hreithlaw.com with the jurisdiction and the structure.

What the work produces, in sequence

The review does not open with drafting. It opens with comparison, and the sequence matters because each stage depends on the one before it.

1. A gap memorandum comparing the current articles against the board's actual practice and against the group's own template, entity by entity, so the group sees where the constitution and reality disagree before anyone proposes a fix.
2. A clause-by-clause markup of the constitution showing exactly which provisions no longer match practice or local law, with the specific change needed set out against each clause rather than as a general recommendation.
3. A cross-jurisdiction matrix comparing what each entity's articles say on the points that matter most to a group board: reserved matters, transfer restrictions, quorum, and how a deadlock is resolved.
4. A board pack setting out the amendment resolution itself, the majority it requires, and the sequence of the statutory filing, ready for the board and the shareholders to act on without a second round of drafting.

Where the review turns up a deadlock provision that does not actually resolve a deadlock – a common finding once a joint venture has been running for several years without the point being tested – the output feeds directly into a separate exercise on deadlock mechanism design, rather than being patched inside the review itself. The two pieces of work answer different questions: one describes what the document currently says, the other builds the mechanism the document should have had.

Where this differs by jurisdiction

The method does not change between jurisdictions. What changes is what the local instrument is called, what has to be filed to make an amendment effective, and how much of the document's content is fixed by mandatory rules rather than left to the shareholders to agree. In some jurisdictions the constitutional document is a single instrument covering both the company's objects and its internal governance. In others, the equivalent content is split across a memorandum and a set of by-laws, or between a public-facing filing and a private shareholders' agreement that never reaches the register.

How large a majority is needed to pass an amendment, and whether that majority can be varied downward by the shareholders themselves, is one of the points that a comparison across the majorities required to amend articles is built to answer without assuming the figure is the same everywhere. A transfer restriction that reads as a minor formality in one jurisdiction can be the clause that decides whether a sale can complete at all in another, a distinction a company only discovers by checking the local position, as with the question of whether articles can restrict share transfers in a specific register.

Once a company incorporated abroad relies on articles drafted for a different legal system without adapting them to local mandatory rules, and a shareholder dispute reaches the point of a formal resolution, the option to rely on the constitution's own dispute mechanism ceases to be available if that mechanism was never valid under local law in the first place. By then the group is arguing about the mechanism instead of the dispute it was meant to resolve.

This review is offered across the jurisdictions in which the firm advises, from established holding centres to smaller operating jurisdictions, and covers both common-law constitutions and civil-law statutes of incorporation. Confirming which instrument governs which point, for a given entity, is itself the first stage of the review rather than something assumed before it starts.

What this service does not include

This review maps what the constitution requires and what the board's practice is actually doing. It does not extend into acting for the company in either capacity. The engagement does not include acting as, supplying, sourcing or arranging a director, company secretary, nominee shareholder or trustee for any entity in the structure, and it does not include any activity for which a trust or corporate service provider licence is required.

That boundary exists because those activities sit under a separate licensing regime in a majority of the jurisdictions a cross-border board operates across. It is a licensing constraint, not a preference for one kind of work over another, and it holds regardless of how convenient it would be to have one adviser handle both sides.

What the client receives instead is the analysis:

• The requirement mapped against the entity's actual constitution
• The criteria a proposed appointment or amendment would have to satisfy
• The existing appointment terms reviewed against what the document provides
• The regulatory exposure each gap creates, assessed and ranked

A group that assumes its group-wide appointment terms apply uniformly across every subsidiary is relying on an assumption the register does not share. Confirming which document actually controls the removal of a director in each entity, before a dispute forces the question, keeps the option of a clean amendment open rather than a contested one.

Review your appointment terms Write to info@hreithlaw.com with the jurisdiction and the structure.

Frequently asked questions

What happens if the articles are never reviewed?

The constitution keeps applying exactly as drafted, whether or not it still matches the board's practice. A gap only becomes visible when someone relies on the document – to remove a director, block a transfer, or resolve a dispute – and finds it says something different from what the group assumed.

How often does a review need to happen?

Not on a fixed calendar. The trigger is an event rather than a date: a new co-investor, a cross-border restructuring, a change in the board of directors, or a transaction the current constitution was never drafted to accommodate. A group that only reviews after a dispute has already lost the benefit of doing it early.

Does the review change for a foreign-owned company?

Yes, in one respect. A foreign-owned entity's articles were often drafted by adapting a parent's template rather than starting from the local mandatory rules, which is precisely where the drift the review looks for tends to concentrate. The method stays the same; what it finds usually does not.

What does the review actually require from the client?

Copies of the current constitutional documents for each entity in scope, the most recent board resolutions touching governance matters, and access to whoever inside the company can confirm how the board actually operates in practice. The review works from documents and from the gap between them and reality, not from assumptions about either.

Who inside the company should own this?

Usually the general counsel or company secretary function where one exists, or the finance director where it does not. The review does not replace that person's role. It gives them the comparison they need to bring an amendment, or a change in practice, to the board with a clear basis for the recommendation.

Ingrid Solberg, Expert author, Constitutional documents and cross-border board governance. Ingrid focuses on the constitution of multi-entity groups: how reserved matters, quorum and transfer provisions hold together, or fail to, across several jurisdictions at once. She works from the document outward, treating the board's actual practice as the test of whether the constitution still functions. Her recent work concentrates on groups that have added or restructured entities faster than their constitutional documents have kept pace.