Can a company alter its memorandum and article of association?

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Dear Formations Factory,

I am one of three directors in a limited by shares company. We are also shareholders, but there are 4 additional shareholders who are not involved in the management side of things - they just invested in our business when we started up.

We were chatting yesterday about altering the memorandum to remove the name of an 8th shareholder who recently sold his shares me. Can we take his name off the memorandum since he is no longer involved? Is that a legal requirement?

Another thing we were wondering - we wanted to change the articles to enable us three directors to have control over the issue and transfer of shares. It makes more sense to be able to authorise these things ourselves without having to consult the other 4 shareholders who are not directors. They are happy with this because they are family members (they trust us!) and they find it a bit of a hassle having to sign resolutions.

Sorry if this is a lot to ask but I figure someone on here will know. Thanks a lot. Looking forward to your replies.

Jaco Martin

Answers

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Hi Jaco,

No problem at all - that’s what we’re here for.

The memorandum question: No, you cannot change any of the details on the memorandum of association. This document will remain in its original state forever, even if all of the original shareholders leave the company in the future. This is because the memorandum is a record of the first people who set up a company, it’s nothing to do with who currently owns the business.

What you should do, however, is update the statutory register of members that you keep (or should keep!) at your registered office or alternative inspection location. When it is time to file your annual return, you should tell Companies House about the share transfer and that one of the shareholder’s has ceased being a member of the company.

The articles question: If you want to change the articles for any reason, you will have to pass a special resolution at a general meeting or in writing. This means you will have to obtain a 75% majority vote, which I’m sure you already know. From what you’ve said, this won't’ be an issue for you. When you have drafted the new articles to reflect the necessary changes and you have passed the resolution, you must file both of these documents at Companies House. This information will then be recorded on the public register.

Please remember to keep a copy of the resolution and the new articles with your other statutory records at your registered office or alternative inspection location.

I hope this answers your questions. Let me know if I can be of any further help. All the best,

Rachel

10 months ago
 

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