Opening a new company generates a range of wide range of paperwork. Two important documents that any new business owner should be aware of are the memorandum and articles of association. This guide will tell you how both of these documents apply to your business.
Introductory Guide to the memorandum and articles of association
Both documents are a legal requirement for all UK companies and are produced upon incorporation and registered to Companies House. They can be defined as follows:
The memorandum of association is a legal statement outlining the names of the company founder, listing each subscriber’s objective to become a member and incorporate the business via a signature.
The articles of association are the constitution of the company and act as a guide on how the company is to be run. Most companies will adopt a ‘model’ set of articles however, where required, a personalised set of articles with bespoke rules and regulations can be adopted.
The memorandum and articles of association are public documents that may be viewed and downloaded from the Companies House website. In addition every company must keep a copy of the memorandum and articles of association at their registered office address.
Can the memorandum be changed?
As the memorandum is a legal document its format cannot be altered before the formation of the company. Once incorporated the name of the original subscribers cannot be altered or removed as it is a document with historical significance and must remain consistent throughout the lifetime of the company.
What is covered in the articles of association?
The model articles of association outline the following in relation to how the company should be run:
– Decision making
– Member’s rights, duties, and liabilities
– Director’s duties, responsibilities, and powers
– Director appointment and removal
– Share capital
– Profit distribution
– Company secretary appointment
– Administrative issues
Can the articles of association be altered?
Unlike the memorandum, the articles of association can be changed at any time so long as the changes are agreed by a 75% majority of the company members in a general meeting and a special resolution is passed. Once this process is completed a copy of the updated articles must be submitted and filed with Companies House within 15 days.