Memorandum & Articles of Association
Historically the Memorandum together with the Articles of Association formed the constitution of a company. In the past, the function of the Memorandum was to set out the main purpose of the company and to regulate its affairs with outside parties. Information was required on:
- The name of the company
- The situs of the registered office
- The purpose (objects) of the company
- The liability of members i.e. whether it was limited or not
- The initial share capital of the company
The Company’s Act 2006 has now simplified and greatly reduced the significance of the Memorandum. All that is now required is:
- A statement of intent by the promoters to form a company, and
- A statement that each subscriber agrees to become a member of the company and that each takes at least one share.
The document is now regarded simply as part of the registration requirement and becomes a historic document with no ongoing status as part of the company’s constitution.
For companies which were set up under the previous 1985 Act, company information contained in their memoranda which is now surplus to the 2006 requirements is deemed in law to be included as part of the company’s articles e.g. the objects clause and the share capital clause. This allows the information to remain as part of the company’s constitution.
Articles of Association
The position under the Companies Act 2006 is that they form the main constitutional basis of a company. The articles regulate the company’s internal affairs and may outline provisions to deal with crucial matters such as the issue and transfer of shares, voting rights and conduct at members’ meetings, procedures regulating the appointment and removal of directors, directors’ powers and authority and provisions setting out a means by which the articles themselves might be amended.
A company is able to fashion articles however it deems appropriate, but Model Articles have been provided by statutory instrument which are available for amendment or wholesale adoption by a company. Alternatively a company can choose to have articles drafted from scratch to suit its requirements.
Under the Companies Act 2006, each company must register its articles as part of its registration application. A failure to do so will result in the Model Articles being applied to the company by default.
We are able to assist and advise you on appropriate articles of association for your company where you intend to commence a new business venture or incorporate a new company.
Companies constituted prior to the Companies Act 2006
For companies formed prior to the implementation of the Companies Act 2006 who do not have customised articles, then the previous default articles contained in Table A of the Companies (Tables A-F) Regulations 1985 will apply. There have been various amendments to the content of Table A since it was introduced in 1985 therefore it is necessary to check the date of a company’s incorporation to identify which version of Table A will apply.