- Power of
- Memorandum & article of association
What are the Memorandum and Articles of Association?
As a business or company owner, you’ve probably seen the term Memorandum and Articles of Association in a few different places, but what are they and do you need them?
If you’re a company owner, then yes you do need tham and, in fact, you should already have them in place. If your business isn’t incorporated then you don’t need to worry about it unless you’re thinking of incorporating.
In short, the memorandum contains the names of all the subscribers (the people who were there at the founding point of the company e.g. initial shareholders) and the Articles of Association are a set of rules that govern how the company is run.
Every company must have a memorandum in place, they will all be in the same format and contain the same information. This includes:
- Company name
- Date of incorporation
- Type of company
- Act under which the company is registered
- Names and signatures of all subscribers (original shareholders or guarantors)
- Limited liability of shareholders or guarantors
Any person who adds their name to the memorandum during incorporation will become a member of the company, and will continue to be members until they decide to leave. Details of members will be made public on the Companies House website under the company details.
The Articles of Association
Most limited companies will use the Model Articles, but it is possible to change them if needed. These Articles will set out how the company is run, governed and owned by the members. The Articles can put restrictions on the company’s power – which can be useful if the shareholders and directors do not agree and try pulling the company in different directions. This Model Articles cover the following:
- Directors’ powers, responsibilities, decision making, appointment and removal, indemnity and insurance
- Shares, distribution of shares and Dividends
- Capitalisation of profits
- General meetings
- Voting Rights
If you want to change these articles in any way, such as issuing different classes of shares or adding or removing shares, then you can. However you will have to notify Companies House when applying to incorporate the company so that they can be reviewed to ensure they are acceptable.
You can do this as part of the incorporation process with Ampsy Business Services L.L.C. Just select that you wish to supply your own custom articles when incorporating.