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Memorandum and Articles of Association 101

Memorandum and Articles of Association 101

by | Sep 19, 2020 | Uncategorized | 0 comments

Once you’ve obtained a registered office address, your business will be running in earnest along with the presence of a pile-up of paperwork. You can avoid becoming overwhelmed by the inevitable if you familiarise yourself with vital business terms and documents; particularly the memorandum and articles of association. 

This guide will outline how you can get a copy of the memorandum and articles of association and detail what these documents mean for your business. 

Are the Memorandum and Articles of Association a Legal Requirement?

UK companies are legally required to have both the memorandum and articles of association. Both of these governing documents are produced when a company completes its formations process; subsequently both the memorandum and articles of association will be registered at Companies House

What Is the Memorandum? 

The memorandum of association (in full) is a legal statement detailing the names of a company’s founders. Compiled in a standard format, the document lists each subscriber’s objective to become a member and incorporate the business. Essentially, it is a single document containing the names of the company’s founding members (shareholders/guarantors) who have subscribed/added their name to the memorandum. 

The members’ signature to this document outlines the intention of these “subscribers” to form and join the company in question.

Can the Memorandum Be Amended?

Since the memorandum is a legal document, the format may not be changed prior to forming your company. The memorandum of association contains historical significance and will remain consistent for the lifetime of your company regardless of original or new company members leaving or joining the business. Therefore, the names of subscribers cannot be altered or removed after company set-up.

What Are the Articles of Association?

The articles of association act as a blueprint to how a company should be run. Companies may choose to select “model articles” from Companies House or change and personalise the standard document in order to create their own rules and regulations. 

Technically, the articles of association are the constitution of a limited company and contain a number of pages outlining the ways in which a company should be structured and managed in relation to the following: 

  • Decision making
  • Members’ rights, duties, and liabilities
  • Directors’ duties, responsibilities and powers 
  • Share capital (issuing and transferring shares)
  • Profit distribution
  • Director appointment and removal
  • Decisions regarding the appointment of company secretary 
  • Administrative issues

Can the Articles of Association Be Amended?

Unlike the memorandum, the articles of a company limited by shares or guarantee can be changed at any time. Any changes made to the articles of association must be agreed by a 75% majority of the company’s members at a voting process at the general meeting. Subsequently, it has to pass a special resolution, unless entrenchment provisions are in place (which may result in more onerous approval requirements).

Upon confirmation of the changes, a copy of the resolution and updated articles have to be submitted and filed with Companies House within a period of 15 days.

It’s best advised to seek legal assistance if you choose to create your own articles of association in order to avoid any potential errors in the creation and submission process. 

What Are Model Articles?

Unless a company decides to form their own articles of association, the model articles from Companies House under the Companies Act 2006 are considered the default articles. They are a simple document and easily adoptable by private limited companies that issue only ordinary shares, and for some companies limited by guarantee.

Model articles are a sensible choice for small companies that are exempt from any specific provisions.

Self-formed articles are a better option for companies that have multiple share classes and more than a single shareholder as the document may be tailored to meet a company’s individual goals, ensuring all company members are fairly treated in adherence to the shareholders’ agreement.

Keep the Memorandum and Articles of Association at Your Registered Office

Companies must keep a copy of the memorandum and articles of association at their registered office or SAIL address. Remember, a company’s articles will be displayed on public record. 

Companies House Must Receive Your Memorandum and Articles of Association  

If you have registered your company online using Companies House Web Incorporation Service, you have to adopt the model articles by simply submitting the memorandum online. Companies House does not require a copy of the model articles.

However, if your company is registered via the Companies House paper application, you can choose either the model or bespoke articles. Both the memorandum and bespoke articles must be submitted by post (albeit the model articles needn’t be included). 

How to Obtain a Copy of the Memorandum and Articles of Association

In order to receive a copy of the memorandum and articles of association, simply go to Companies House and download a copy of the articles online. Moreover, it’s a simple process for those companies that are already registered as you simply have to head over to Companies House for the same, or use the help of a quick and efficient company formations service.

Remember…

It’s crucial for business owners to know the terms and significance of important company documents and processes. At the point of forming your company, the memorandum and articles of association will be submitted to Companies House and notably, all UK companies are legally required to maintain both their memorandum and articles of association.

For more information about the memorandum or articles of association, or for expert assistance with obtaining a business addresscontact Your Virtual Office London, today.  

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