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Change to Companies House articles of association ‘absolutely essential’

Out-Law News | 10 Mar 2022 | 11:31 am | 2 min. read

Proposed changes to gendered terminology the Companies House uses in its default articles of association must be “made without delay” to improve the visibility of women on boards in the UK, a legal specialist has argued.

Kate Dodd, employment law expert at Pinsent Masons, said the term ‘chairman’ used in the articles of association “clearly suggests that the position should be filled by a man.” It comes after the British Chambers of Commerce (BCC) and more than 50 other business groups signed an open letter calling on the UK government to use the term ‘chair’ instead.

Proponents argue that including the word ‘chairman’ as the default term in the model articles, means it is often repeated in the articles of companies across the country when they are incorporated. While companies can adopt bespoke articles or change the ones they use, the letter argued that many are under the impression that the default term it is a requirement of Companies House.

All the signatories said they are taking steps to amend their own articles to use the word ‘chair’ and encouraged other businesses to follow suit. They acknowledged that the “symbolic step” was not a “silver bullet” to the issues faced by women in the workplace but said the change would “signal to future generations regardless of gender, that they have an equal role to play”.

Dodd said: “We know that language matters – it creates signals and often unconscious impressions as to accessibility - which is why so many of our clients are carefully looking at the language that they use in their job adverts and employee lifecycle documentation to assess whether it is coded toward - or against - certain groups.”

“Using the word ‘chairman’ is not an unconscious choice. It clearly suggests that the position should be filled by a man, and any woman stepping forward is therefore starting out as an imposter in the role. Against this backdrop, is it any surprise that whilst we have seen progress in the number of women on boards in the UK, the vast majority of these are in non-executive positions - without a day-to-day operational role which may hinder the speed of change?  Further, it’s unlikely that a woman in a non-executive position will be seen as a role model by  other women working in that organisation since they are unlikely to be visible to them.” Dodd said.

“Given the work being done by so many UK organisations to create gender equality and close the pay gap, it’s absolutely essential that this change is made without delay,” she added. The open letter called for the change in terminology to be implemented in upcoming corporate transparency legislation.

According to the 2022 FTSE Women Leaders Review, while the number of women on FTSE 350 boards has increased in recent years, just 8% of FTSE 100 CEOs and only 13.7% of executive directors are women.

Tom Proverbs-Garbett, corporate governance expert at Pinsent Masons, said: “As we reach AGM season, the call to amend the terminology used in company articles is timely. A large number of corporates have amended their articles of association over the last two years - or are in the process of doing so - in light of changes resulting from the pandemic, the move to permit hybrid general meetings and associated constitutional changes being the prime example.”

He added: “Many firms have taken the opportunity to replace references to ‘chairman’ and ‘his/him’ with ‘chair’ and otherwise gender-neutral language. Making similar changes to the model articles is therefore wholly in line with current attitudes - and the government should take note. As the open letter states, it is a small but very significant step given these are the default constitutional documents for UK companies.”