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The memorandum and articles of association are two constitutional documents that all limited companies are required to have when they incorporate at Companies House. The memorandum states the names of each subscriber (the very first shareholders or guarantors who become members during the company formation process) and their intention to form and join the business. The articles of association is a governing document that outlines the purpose of a company, the rights and responsibilities of its members and directors, and the way in which the company must operate as a whole. Together, these two documents form the basis of your company’s constitution.
Content summary:
- The memorandum of association
- The articles of association
- Altering the model articles
- Changing your articles after incorporation
The memorandum of association
All companies must use the same pro forma memorandum document. It will contain the following information:
- Company name
- Date of incorporation
- Type of company – limited by shares or limited by guarantee
- 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 or corporate body that subscribes (adds) their name to the memorandum during the company formation process will immediately become a member of that company. They will continue to be members until they choose to leave the firm. Details of all members are registered with Companies House and displayed on the central public register, which is available to everyone online.
The articles of association
The majority of new limited companies adopt model articles provided by Companies House under the Companies Act 2006, but it is possible to alter this version or draft your own bespoke articles to reflect the different requirements and objectives of your company if you have specific needs not covered in the model articles.
The contents of the model articles cover the following matters:
- Directors’ powers, responsibilities, decision making, appointment and removal, indemnity and insurance
- Shares, share rights, distribution and dividends
- Capitalisation of profits
- Shareholders
- General meetings
You will have to alter the model articles or create your own if you wish to issue any class of share other than ordinary. Likewise, if you want to deviate from the standard version by changing, removing or adding any provisions, you will have to manually alter the document or create your own articles from scratch and submit them to Companies House.
Altering the model articles
If you decide to adopt an amended form of the Model Articles (such as introducing more than one share class), you will have to make the relevant changes yourself and file a copy with Companies House with your company formation package. If you choose to adopt the model articles, you do not have to submit a copy for Companies House. Simply indicate on your registration application that your company is adopting model articles.
Changing your articles after incorporation
You can alter the articles at any time after the company is incorporated. To do so, the members must pass a special resolution agreeing to the changes, unless you wish to alter an entrenched provision (see below). A copy of the final document as altered must be submitted to Companies House within 15 days of the resolution being passed.
Sometimes these changes can be as simple as granting more rights to directors. Other times you may have to make more complicated changes, like creating more share classes or changing the rights of members. Whatever the reason, we advise seeking professional advice beforehand.