Aipedia: Company formation and secretarial agents

AI-drafted articles of association and shareholder agreements

Aipedia, by the Apex broking team · Last reviewed 2026-10-30

AI can produce bespoke articles and shareholder agreements quickly, but the formation agent remains liable for clauses that do not work. Drafting errors often stay hidden until a dispute, exit or funding round, when they are costly to fix.

Part of: AI in Company formation and secretarial agents

In short

Formation agents and company secretaries may use generative AI to adapt model articles, create share classes and draft shareholder agreements. The risk is a document that reads well but does not hang together: rights that conflict between the articles and the agreement, missing leaver or transfer provisions, or definitions that point nowhere. The agent owes business clients a duty of reasonable care and skill under the Supply of Goods and Services Act 1982. PI usually responds to a client's negligence claim, subject to the policy terms and to drafting being within the declared services.

How agents use AI to draft constitutional documents

Most companies formed by agents start with model articles. Clients with co-founders, investors or employee shareholders often want more: different share classes, drag and tag rights, pre-emption on transfer, leaver provisions or reserved matters. AI tools let an agent turn a short instruction into a full draft in minutes, and they are commonly used for these tasks:

adapting model articles to add or remove provisions;
drafting rights for ordinary, preference, non-voting or growth shares;
producing a shareholder agreement from a term sheet or email thread;
comparing an existing constitution against a client's new instructions.

The output is fluent and confident, which makes errors hard to spot without a careful read by someone who understands how the two documents interact.

The duties that apply

No regulator has published AI guidance specific to company secretarial drafting, so the ordinary duties apply in full. For business clients, section 13 of the Supply of Goods and Services Act 1982 implies a term that the service will be carried out with reasonable care and skill; for consumers, section 49 of the Consumer Rights Act 2015 does the same. Agents within accountancy firms are also bound by their body's technology provisions, and those within law firms by SRA rules.

Once filed, articles become part of the client's public record at Companies House. An error is not just a private drafting point. It binds the company and its members until it is changed, which needs a special resolution with the right majority and may not be achievable once shareholders have fallen out.

Drafting is one of several AI uses covered in the Aipedia guide for company formation agents.

What can go wrong

Illustrative scenario: two founders ask an agent for articles with A and B shares, where the B shares carry no votes but full dividend rights, and a shareholder agreement with a bad leaver clause. The AI draft gives the B shares votes in the articles while the agreement says they have none, and the leaver clause refers to a valuation mechanism that does not appear anywhere. Years later one founder leaves on bad terms. The parties dispute who controls the company and what the leaver's shares are worth, and both blame the agent.

Other common faults include definitions borrowed from another jurisdiction, transfer restrictions that conflict with an investor's rights and drafting that unintentionally affects tax-advantaged share schemes. Related risks arise when shares are later issued; see AI for share allotments and capital changes.

How PI usually responds

A claim that an agent drafted articles or a shareholder agreement negligently is the kind of claim PI is designed for, subject to the wording. Points that commonly decide the outcome include:

whether drafting constitutional documents is within the professional services declared to the insurer;
whether the agent gave legal advice beyond its competence, which some policies treat cautiously;
the policy's approach to contractual liability if the engagement terms promised more than reasonable care;
when the claim is made, since PI is usually written on a claims-made basis and drafting errors can surface years later.

See PI for company secretaries and corporate services, company secretary PI cover and does formation agents' PI cover AI errors?.

Practical controls

These steps reduce the chance of an AI drafting error reaching the register:

Use AI to draft from an approved precedent, not from a blank prompt.
Have a qualified person read the articles and agreement together and check that the rights match.
Run a defined-terms and cross-reference check before sending.
Confirm the share rights back to the client in plain English and keep their sign-off.
Refer complex structures, investor deals or tax-sensitive schemes to a solicitor.
Keep client documents out of public AI tools; see client confidentiality and AI.

How Apex helps

Apex arranges PI for formation agents and company secretaries who draft constitutional documents. A broker checks that bespoke drafting sits within your declared services and how the policy treats AI-assisted documents.

Sources

Frequently asked

Can a formation agent use AI to draft articles of association?

Yes. No rule prohibits it, but the agent owes the same duty of reasonable care and skill as for any other drafting. A qualified person should check the output, particularly where share classes, leaver terms or investor rights are involved.

Who is liable if AI-drafted articles conflict with the shareholder agreement?

The agent who supplied the documents may face a claim if the conflict resulted from a lack of reasonable care. Using an AI tool does not pass that responsibility to the tool's provider, so it tends to rest with the professional who delivered the work.

Does PI cover drafting shareholder agreements?

It may, if drafting is within the professional services declared to the insurer. Some formation agent policies focus on filing and secretarial work, so check the description of services and any limits on legal advice before offering bespoke agreements.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.