Memorandum and related documents explained
Both memorandum of association and related products are required for an established company in the United Kingdom under the Companies Act, 2006. The Memorandum of Association is a document establishing the company and the terms of association setting out how the company is run, managed and owned. Therefore, the terms of the association will include the responsibilities and powers of the directors and the means by which members promote the control of the board of directors.
Memorandum of Association
The Memorandum confirms that subscribers want a company under the Companies Act and agree to become members of the company. In the case where a company is to have a capital stake, they are committed to getting at least one share each.
The Memorandum of Association must have a prescribed form and must be authenticated by each subscriber. The MOU, which include a compliance statement, must be sent to the company along with the company’s application and the product of the company’s new association.
Articles of association
The articles of association set out how the company is run, managed and owned. Articles may place restrictions on the powers of the company – which may be useful if the shareholders want to be assured that the manager would not pursue a certain course of action, at least not with the approved by shareholders. By default, however, the Companies Act 2006 a company has unlimited power.
In addition to the articles, which is a public document, shareholders may participate in a shareholders agreement to additional articles related to the operation, management and ownership of the company that they want to keep out of the public domain.
Articles of association â€“ what needs to be included?
There is no prescribed form for the post although there are certain rules that need to be included in it. To support this, model articles for three of the most common types of company (private company limited by shares, private companies limited by guarantee and public companies) are defined in the company regulations 2008 and have been amended. The most up to date version is available on the companies House website. In addition, for the company’s charities Charity Commission, a set of model articles can be used and firms adjust interest community has a version for companies interested in community contract.
The article should include the following:
â€¢ Responsibilities of the members;
â€¢ Directors’ powers and duties;
â€¢ Directors meetings, voting, and other delegates;
â€¢ Keep records of the directors;
â€¢ Appoint and dismiss directors;
â€¢ Issuing shares;
â€¢ The different class sections;
â€¢ Share transfers;
â€¢ Dividends and other distributions to its members;
â€¢ The decision of the members of Congress and participants;
â€¢ Media and communications;
â€¢ Compensation insurance for directors.
Articles may be amended by a special resolution of the members. If a company changes its article other than to the pattern post a copy of the article must be submitted to the Company within 15 days of the change to consider. A copy of the resolution on the amendment must be submitted within 15 days after adoption. You do not need to tell the company why you are changing the terms of the association.
Director and company secretary (if indicated) of a company should have a good working knowledge of the constitutional documents of the company, especially in terms of the association.
As business manager of the company, they need to be comfortable that they are acting within the scope of the powers conferred by the article and following the processes and procedures or other reasonably well laid out there. It`s for the board to review the articles on a regular basis. As the company and its circumstances change, some existing provisions may no longer be useful or new regulations may be desirable. By reviewing and, where appropriate, update the articles of association the company can achieve the most appropriate balance between the needs of the directors and shareholders, the rights and powers of the former company executives while protecting the interests of its members.
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