Memo and articles of association

Under the Company’s Act a memorandum of association and the articles of association are required for a company formed in the UK and these are to be submitted to Companies House when the Company is formed.

The Memorandum

The memorandum is the document that sets up the company and contains the names of all the subscribers (the people who were there at the founding point of the company e.g. initial shareholders). As it is a legal document it will be in the same format which includes the following
  • Company name
  • Date of incorporation
  • Type of company
  • Act under which the company is registered
  • Names and signatures of all subscribers (original shareholders or guarantors)
  • Limited liability of shareholders or guarantor
  • It cannot be altered regardless of any new members joining in or leaving as it is formed when the Company is incorporated.These Company details will be open to public view under Company details on Companies House.
The Company's Act allows other decisions to be passed thorugh special resolution which under normal circumstances can be passed through ordinary resolution. You can write into your Articles of Association what important decisions or transactions you would like to hold a special resolution to decide. This can act as a safeguard measure from any risky decision being taken that can effect the future Company's operations.

Articles of Association

The articles of association sets out how the company is run, governed and owned. The articles of association includes the responsibilities and powers of the directors and the means by which the members exert control over the board of directors.The Articles can put restrictions on the company's power - which can be useful if the shareholders and directors do not agree and have different reservations on any matter.The Articles of Association covers the following
  • Directors' powers, responsibilities, decision making, appointment and removal, indemnity and insurance
  • Shares, distribution of shares and Dividends
  • Capitalisation of profits
  • Shareholders
  • General meetings
  • Voting Rights
You can change the Articles after incorporation however any change must be done via a special resolution. The final copy of amended articles must be submitted to Companies House within 15 days of the resolution being passed. It is best to seek out professional advice first before changing the Articles.
By updating the articles of association the company can achieve the most appropriate balance between the needs of the directors and members, giving the former the right powers to run the company while protecting the interests of its members.