Your business idea’s in place and your members are ready to rumble. Now what? You’ve ticked off the hard stuff. Company name? Check. Members and shareholders? Check. Founding documents? Oh, wait… When forming your company, you’ll receive a Memorandum of Association and Articles of Association, approved by Companies House.
What is a Memorandum of Association and Articles of Association?
A memorandum of association could be compared to signing a tenancy agreement or signing your marriage papers. It’s a legally binding document between individuals, stating that they agree to form a company together.
Articles of Association (often simplified as “articles”), on the other hand, define the responsibilities of the directors and the type of business to be undertaken. This document, combined with the memorandum of association, forms a company’s constitution.
Here, we offer a concise guide to these two vital documents.
Further information on: Memorandum of Association
What law will this legal document sit beneath?
If an individual is listed as a member or shareholder on a memorandum of association document, it shows they wish to form a company under the Companies Act 2006. This legal document can be viewed by any member of the public through Companies House.
What will my memorandum of association look like?
The memorandum of association includes the names of all members of the company. This means anyone who has at least one share in a company limited by shares or any member of a company limited by guarantee.
The names of each member will be stated, indicating an agreement to the declaration of the document. This statement will vary slightly, in accordance with the kind of company you form. Both documents are dated and the document will also include your company name and registered company address.
If you’re forming a company limited by shares, your document should state:
Each subscriber to this memorandum of association wishes to form a company under the Companies Act 2006 and agrees to become a member of the company and to take at least one share.
If you’re forming a company limited by guarantee, your document should state:
Each subscriber to this memorandum of association wishes to form a company under the Companies Act 2006 and agrees to become a member of the company.
Further information on: Articles of Association
What are the agreements in this document?
People go back on their word and change their minds. It’s human nature. But when you’ve got a company, you want it to be smooth sailing. And for that to happen, company members need to be on the same page. The articles provide security between company members, making sure everyone knows the governing rules of the business. It provides a contract of membership.
Agreements generally included in the Articles of Association:
- The power of the company’s directors, their responsibilities, details around their appointment and removal (including remuneration, termination and expenses), their indemnity and insurance.
- The distribution of shares and dividends.
- The capitalisation of profits.
- The organisation of general meetings.
- The voting rights of members at meetings.
Do I need to generate my own articles?
No, as a small business, Companies House provides model articles of association. If you’re forming through us at The Formations Company, all our formation packages come with electronic versions of these documents.
What’s the next step to getting a Memorandum and Articles of Association?
Form your company! Even with our low-cost formation packages, you’ll receive these important documents. The process of signing them is all online, with a quick and easy process. One thing to make sure of is that you’re clear who the members and/or shareholders of your company are before you form.
Where should I keep these documents once I have them?
Once your company has been approved by Companies House you’ll get these documents. Additionally, we’ll store all your documents electronically with every package, so you don’t have to worry about misplacing or losing your important papers.
For further information head to our help centre.