The use of the word “Chairman” in corporate documents is being strongly challenged by business leaders due to its potential negative impacts. Business leaders are pushing for the government to replace this male-coded phrase and instead refer to “Chair” within the model articles of association.

The model articles of association are the default set of rules detailing how a business will be governed including the processes for appointing and terminating directors, and for organising directors’ and shareholders’ meeting. It is a mandatory requirement for businesses to have a set of articles which are publicly available and registered at Companies House when the business is incorporated.

Although businesses are entitled to submit their own bespoke articles of associations, many choose to adopt the model articles.

The Proposal

The British Chambers of Commence has written to the government calling for “Chair” to be included in the model articles as the default position replacing “Chairman”. The signatories of this letter included all 53 Accredited Chambers with representatives from the CBI, the Institute of Directors, and the Greater Manchester Chamber of Commerce among them.

The business leaders argue that by taking this symbolic step to amend the model articles would provide inspiration to future generations that they can have an active and influential role in business regardless of gender.

The letter also includes research from the World Bank that suggested use of gendered language can contribute to the disparity in rates of employment between men and women. It is argued that the use of the word “Chairman” could create a subconscious bias that this role is intended to be assumed by a man which could lead to women not seeking out such positions, despite having the qualities to excel in the role.

Discussion

We have seen recently that many businesses have promoted content for International Women’s Day on 8 March by highlighting the contributions that women have made whilst also addressing issues of gender equality in the workplace, with many contributors sharing personal experiences of gender inequality. This has led to meaningful discussions within many organisations with measures to address this issue being considered, including the use of inclusive language.

Addressing gender equality will not be solved by this proposal but it is a step in the right direction supported by many influential business leaders. There will of course need to be further measures apart from using gender-neutral terminology to ensure that gender is not a barrier to progressing in business, but the use of inclusive language can be a meaningful step on that journey.

If the government responds positively to the proposal, it could result in the model articles being amended to introduce the gender-neutral language requested. This does appear unlikely as the FT reported that Kwasi Kwarteng has privately rejected the proposal following reluctance to use additional parliamentary time amending legislation.

Amending Articles of Association

Although legislation would represent significant progress and intent from the government, businesses can also update their articles of their own volition by following the correct procedures as members of the British Chambers of Commence are in the process of doing.

Such amendment would generally require a special resolution of the members provided there is a legitimate reason for making such changes. A special resolution means a resolution passed by a majority of not less than 75% of the members.

The percentage of votes required to amend the articles of association could be varied to be set at a higher number (either within the articles or a private shareholders agreement) so it is important to ensure that any voting and notice requirements are properly considered before carrying out any amendments.

A copy of the British Chambers of Commerce’s open letter can be found below:

https://www.britishchambers.org.uk/media/get/Chairman%20letter%20-%20updated.pdf

Our corporate team would be delighted to discuss these issues further and, if required, they can assist you with the relevant drafting and process to update your company’s articles of association.

Our corporate team can be contacted on 0345 241 5305 or by completing the contact form found on this page.