Memorandum and articles of association
- About the memorandum of association
- About the articles of association
The memorandum and articles of association, often simply referred to as ‘the memorandum’ and ‘the articles’, are separate constitutional and governing documents that limited companies need when they are incorporated with Companies House. The memorandum records the names of the members (shareholders or guarantors) who are registering the company, along with their agreement to set up the company and become members of it. The articles is more like a rule book; a set of strict guidelines about how the company should operate and be managed. All members and company officers (directors and secretaries) are legally required to follow these rules at all times.
About the memorandum of association
What information does the memorandum contain?
The memorandum of association contains the names of every person who is listed as a shareholder or guarantor on the company formation application form. These individuals are known as ‘subscribers’, because they are subscribing (adding) their names to the memorandum during the incorporation process.
By adding their names to the memorandum, each subscriber agrees to form the company under the Companies Act 2006 and become a member of that company as soon as it is registered with Companies House.
The subscribers of companies limited by shares are known as ‘shareholders’ and the memorandum will state they each agree to take at least one share in the company. The subscribers of companies limited by guarantee are known as ‘guarantors’ and the memorandum will state they each guarantee a nominal sum to the company. The value of their shares or the nominal sum of their guarantees sets the limited liability of each member. This is the amount of money they are legally obliged to pay if the company is wound up or becomes insolvent.
In addition to this information, the memorandum will state the company name and date of incorporation, the Act under which the company is incorporated and whether the company was set up with or without share capital - i.e. limited by shares (with) or limited by guarantee (without).
What does a memorandum look like?
A memorandum of association is a pro forma document that is normally laid out on a single page, depending on the number of members a company has when it is incorporated.
If you register your company online, you will receive your memorandum in PDF format. It may also be provided on A4 paper if your company formation agent includes printed copies as part of their incorporation service.
If you register your company by post, you will receive your memorandum on an A4 sheet of paper.
How do I create a memorandum?
You do not need to produce this document yourself. Companies House will create the memorandum from the information you provide in your company formation application.
How and when do I receive my company memorandum?
If you register your company online, you will receive an electronic copy of the memorandum as soon as your incorporation application is approved by Companies House. This will be delivered to the email address you provide on your application form.
If you register your company by post, you will receive a printed copy of the memorandum by post. This will be delivered to your registered office address a few days after incorporation.
Can I make changes to the memorandum?
You cannot change any details on the memorandum once your company has been registered, so take care when entering the names of each subscriber on the application form.
Should any subscribers leave the company after incorporation, their names will remain on the memorandum. It is normal for members to come and go, so this is nothing to be concerned about. A memorandum is simply a record of the original members of a company.
Where should I keep the memorandum?
You should keep a printed and/or electronic copy of the memorandum at your registered office, or other inspection location if it is not your registered office. This is where you should also keep your other incorporation documents and official company registers.
About the articles of association
What are articles of association?
The articles of association is a comprehensive document that governs the way a company is run. It contains multiple rules and regulations about management and administration, including the rights and duties of company members and officers.
All companies are legally required to ‘adopt’ articles during the incorporation process. Thereafter, all members, directors and company secretaries must fully comply with the provisions stated in the articles. It is, therefore, extremely important that all members and officers familiarise themselves with this document as soon as possible after incorporation and refer to it before making any business-related decisions.
What information is contained in the articles?
It depends on the type of articles you choose to adopt. Companies House provides ‘Model’ articles for private companies limited by shares and guarantee. These articles are prescribed by the Companies Act 2006. Most companies adopt Companies House Model articles or company formation agents’ standard or default articles; however, you may need or want to alter them or create entirely original articles if the Model or standard versions do not address the specific needs of your company. Companies with multiple share classes may not wish to use the Model articles, nor can charitable companies limited by guarantee.
In general, the articles of association should contain clear rules and regulations about the following:
- Financial liability of company members
- Powers and responsibilities of company directors
- Appointment and removal of directors
- Issue and transfer of shares
- Distribution of company profits to members
- Duties and powers of members
- General administrative arrangements
If you are incorporating a company with Companies House, you will only be able to adopt the Model articles in their entirety, and you will not be able to make amendments or introduce your own bespoke document. If you are using Formations Factory to process your company formation, you will be able to choose between adopting our default articles or uploading your custom document. With regards to drafting your own articles, you may need the help of a solicitor or professional advisor, because this can be particular tricky for those with no prior experience.
Do I have to use the Model or default articles?
If you are using Companies House website to order your company formation, you will be required to use the Model Articles. If you are forming your company with Formations Factory, you do not have to adopt the default articles if they are unsuitable for your company; however, you must ensure that any deviation from the standard default version is in compliance with the Companies Act 2006. You may wish to seek professional advice before making any significant changes to the articles.
If you are setting up a company limited by shares and issuing only ordinary shares, the Model articles should be suitable for your needs. Likewise, the default version will be suitable for most companies limited by guarantee. However, if you plan to issue any type of share other than ordinary, or you wish to register your limited by guarantee company as a charity, you may wish not to adopt the Model or default articles in their entirety - as you may have to alter certain parts of the standard version. It is very rare that people need to create entirely bespoke articles, but you are perfectly entitled to do so if you feel it is necessary.
Can I change the articles?
The articles can be changed before and after company formation, as long as the changes are in compliance with the Companies Act 2006. Depending on the types of changes you need or want to make, you may wish to consult a solicitor before doing so.
If you want to change the Model articles before incorporating your company, you can download them from the Companies House website (or your company formation agent’s website), make the necessary changes, and then attach the altered version to your online application form or print and send a copy with your postal application.
To change the articles after incorporation, the members of your company will have to pass a special resolution. A resolution is a legally binding decision. To pass this type of resolution, at least 75% of the members’ votes must be in favour of the proposed changes. This vote can be taken at a general meeting or in writing.
If the required minimum vote is achieved, the changes can be made. Once altered, a copy of the amended articles should be delivered to Companies House, either online or by post, with a copy of the members’ resolution. You should do this within 15 days of passing the resolution. The new articles will be registered and uploaded on public record with your company’s details.
Where do I get the articles from?
Model articles are available to view and download from the Companies House website, and if you are forming your company directly with Companies House, you have no alternative but to use the Model articles. For those using Formations Factory to set up a company, default articles are provided as part of the service. If you wish to create bespoke articles, you will have to draft them yourself and attach them to your application form in PDF format.
How and when do I receive my articles after incorporation?
You will receive a copy of your company’s articles of association when your incorporation application has been approved by Companies House.
If you set up your company online with Formations Factory, these documents will be available to you immediately following your company’s incorporation. You will receive an email notification with document download instructions. Formations Factory also provides a hardcopy document delivery option.
If you use the Companies House postal application to register your company, the articles and other incorporation documents will be sent to your registered office address within a few days of registration.
Where should I keep the articles?
You should keep a printed and/or electronic copy of the articles at your registered office or other inspection location if it is not your registered office. This is where you should also keep your other incorporation documents and official company registers.
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