What is a Memorandum of Association?
Updated August 2016.
A memorandum of association is a legal document that is drawn up when a company goes through formation. This is an important element of a company’s official paperwork and goes together with the companies articles of association.
Basically the purpose of a memorandum of association is to regulate a company’s external business activities and along with the articles of association used to form the company’s constitution. Since 2009 what you need to include on your memorandum has changed. However, you do still need to file a memorandum of association on formation.
The document itself will list the names of the shareholders or members, and will list the number of shares being held by each shareholder. It will also state what the liability is of its shareholders – limited by shares or guarantee, and will explain the types of contracts that the company will be allowed to enter into.
The memorandum can be amended to suit the company’s needs should things change over time, with the exception of anything that falls under corporate legislation, and there will be a prescribed procedure in place to follow to make any changes.
Being that the memorandum of association is a public document that is freely accessible to be inspected by any member of the public, most smaller companies or those who run their business from a residential address may choose to hire a registered office address to use on any forms that are to be made public. This would protect their residential address details from being displayed on public record.
Directors and shareholders who may also want to keep their private home address off public record can use a directors service address service. This can be used on any forms that go on the public register at Companies House and can save them from cold callers and unwanted junk mail.
The memorandum of association is a legal constitution that governs a limited company. It is normally referred to as the memorandum. It is a legal requirement in order for you to form a Limited Company.
The memorandum will inform Companies House of the name, the location of its registered office address, the objectives of the business, and what liability of its members is limited, and also how many shares are issued and the type.
As of October 2009 the memorandum is no longer part of a company`s constitution. It only now contains basic and limited information compared to prior. The memorandum is still required and necessary to be filed.
The memorandum is a statement that subscribers wish to form a new company and that they have agreed to become members of the company. By becoming subscribers they are entitled to the share capital and will be issued with a minimum of one share each.
What is no longer required in the memorandum?
- You do not need to state the name of the company (i.e private limited, public limited)
- You do not need to give the location of its registered office
- You do not need to provide the objectives of the company
- You do not need to show the authorised share capital
Companies formed before 1st October 2009
These are not required to change their memorandum to the new format. The details mentioned above are legally required to show in the Articles of Association.
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