A Memorandum of Association is one of a number of documents necessary to incorporate a company in the UK. There are two variants: one for limited companies with shares, the other for "not for profit" (limited by guarantee) companies. For use in the UK.
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The Memorandum of Association is one of a number of documents and forms required to incorporate a UK company, as described in Company Formation. We offer Memorandum of Association template documents suitable for use when forming:
These incorporation documents are suitable for use for companies incorporated since 1 October 2009 and lists the subscribers, showing evidence of the intention of each subscriber to form a company and become a member of that company. For companies limited by shares, the memorandum of association template also shows each subscriber's intention to take at least one share.
When starting a new business in the UK there are several legal structures to choose from - sole trader, partnership, limited liability partnership and limited liability company.
Limited companies have a separate legal persona from their members which means that they can raise finance in their own right and any debts belong to the company, reducing any personal liability. The main types of limited companies are:
The private limited company is the most common form of this business structure and is straightforward to set up. Private limited companies can be limited by shares or by guarantee. A company limited by shares is the type of company commonly used for forming a small business. These limited companies have limited liability - if the company fails there is no claim on the assets of the shareholders (beyond their original investment). Shares are issued and directors are appointed by the shareholders (often the same people in a small business). The purpose of this type of company is to trade and make profits. These profits can be retained in the business to fund future growth or distributed to shareholders as dividends.
A company limited by guarantee is the type of company commonly used to set up a club or an association. The company has limited liability - the liability of its members being limited to an amount not exceeding £100 which each member undertakes to contribute to the company's assets in the event of it being wound up. No shares are issued. This type of limited company has members. The members agree to contribute a membership fee or subscription, normally have equal voting rights and elect a board of directors. Any profits (often known as "surpluses") are not distributed as dividends, but may be used to support the activities for which the club is formed.
A business cannot operate as a limited company until it has been incorporated at Companies House using the following documents - Memorandum of Association, Articles of Association and form IN01.
The Memorandum of Association contains limited information compared to the Memorandum that was required prior to 1 October 2009 and no longer restricts what a company is permitted to do. Before 1 October 2009 a company was limited to acting within the objects set out in its Memorandum of Association. The old style Memorandum usually had very long objects clauses, setting out in detail all the possible types of business the company could engage in, followed by supplementary objects or powers covering all the standard activities of a company such as taking interests in land, borrowing money, lending money, employing people, etc. This was because anything purported to be done by a company which was beyond those objects would be 'ultra vires' and void at common law, and the directors could be held personally liable for such acts.
From 1 October 2009 the Companies Act 2006 provides that, unless a company's Articles specifically restrict the objects of a company, its objects are unrestricted.
It is no longer required to state the type of company, the location of its registered office or its authorised share capital in the Memorandum. It simply confirms the subscribers' intention to form a company and become members of that company on formation. For a company to be limited by shares, the Memorandum also provides evidence of the members' agreement to take at least one share each in the company. Information on capital and shareholdings, which was previously contained in the Memorandum prior to the coming into force of the Companies Act 2006, is now contained in the form IN01 as either a 'statement of capital and shareholdings' or a 'statement of guarantee' for those companies limited by guarantee.
Once the Company has been incorporated, the Memorandum effectively becomes a historical document which cannot be amended and which will no longer affect the on-going operation of the company.
The Articles of Association (commonly referred to simply as the Articles) are the company's internal rulebook and contain details of running the company, internal management affairs and liability. The Articles form a contract between the company and its members and set out how the company will make decisions to ensure the smooth running of the company. The members have total freedom to decide which rules to include in the Articles, provided that the rules are not against the law.
Form IN01 contains details of the proposed company name, the location of the registered office address, the company secretary (if one has been appointed) and director(s), the subscriber details and the share capital details.
Once the above documents have been submitted to Companies House, a certificate of incorporation will be issued. The certificate is conclusive evidence that the requirements of the Companies Act 2006 as to registration have been complied with and that the company is duly registered under this Act.
This Memorandum of Association is suitable for use in the UK and include clauses covering:
They are also included in our Business Annual Subscription (£99 own use) or Full Annual Subscription (£199 own use) - giving you access to wide range of documents, packages and forms for a single annual fee.