All new companies that are formed in the UK have to have a Memorandum of Association along with Articles of Association. These documents set out the rules along which the company will be run and cover things like how a director can be appointed, how decisions should be made and who has what voting rights within the company.
What is a Memorandum of Association?
The Memorandum of Association used to be one of the main documents used when forming a company but the 2006 Companies Act has now reduced the complexity of this document. From October 2009 onwards all new companies only need to include the following in their Memorandum of Association:
- The names of the members of the company
- The fact that they wish to form a company and if that company will share capital
- An agreement from the shareholders to take at least 1 share each
The Charitable Objects:
In order to meet the Charity Commissions requirements a Company Limited By Guarantee must have drafted into its Memorandum of Association several clauses to ensure that they are set up and carry out their activities for the right reasons. These include a ‘charitable objects clause’, ‘non-profit distribution clause’ and a ‘dissolution clause’. These are all things that we can give you guidance and help with.
If the charity company will have an income in excess of £5,000 then they will need to properly register with the Charity Commission and be fully assessed by them. It can take time to register, but we can help you with guidance where necessary.
Part of the assessment includes looking at the ‘objects’ of the charity. This is a clause in the memorandum of association which is clearly worded to set out that the fact that the objectives of the charity are exclusively charitable and nothing more. If objects are worded in an obscure or confusing manner, or in a way which mean that the objectives of the company are not exclusively charitable, then the charity commission can refuse registration and the company will not be legally deemed to be a charity.
What are Articles of Association?
A company’s Articles of Association are its rule book. Articles of Association govern how a company will be run and how decisions will be made. Articles of Association are designed to be flexible. You can write your own from scratch or use templates that are provided by Companies House or other organizations.
The Articles of Association should cover areas such as:
- The voting rights of directors and shareholders
- How shares and dividends will be allocated
- What the business will do (this is useful for non-profit companies)
- How internal changes within the company will be made
- The rights and responsibilities of the directors and shareholders
Your Articles of Association will cover the complete running of your business, its structure and how important decisions should be made, it is therefore extremely important that they are written correctly. When forming a Private Company Limited by Shares we use standard model articles of association and can alter these to cater to customer’s companies if needed. If this is something you would be interested in please call in 0800 0828 727 to speak to our legal team.
Where can I get a copy of my Memorandum and Articles of Association?
The Memorandum and Articles are normally set when a company is formed. If you form your company through The Company Warehouse we will automatically give you a copy of your company's Memorandum and Articles. If you haven't formed your company through The Company Warehouse we can source a copy of your Memorandum and Articles and supply them to you.
You can either order your Memorandum or Articles of Association through the My Company Warehouse members area of our site, or by giving us a call on 0800 0828 727. If you would like to start a new limited company then please take a look at our company formation packages.