Essentials of a Memorandum of Association

Every company registered in the UK must have a Memorandum of Association that defines the scope, powers and objects of the limited liability company. The Memorandum of Association is vitally important as any transactions deemed to be outside the objects are not legally enforceable.
When registering a new limited liability company the Memorandum of Association is submitted with the Companies House company registration forms. Failing to submit a valid Memorandum of Association when forming a company would result in the company registration being rejected.

1. The name of the company with limited as the last word unless specific dispensation has been obtained to dispense with the word limited on the grounds that the company being formed for any of the objects specified or the liability of the members is unlimited. Before forming a company a name check should be carried out to ensure the proposed new limited liability company name is suitable and not too similar to an existing name.

2. The memorandum must state whether the registered office of the company is situated in England and Wales or in Scotland. The registered office of the company is where official documents such as Company House communications, notices, writs and summonses may be sent.

3. The objects of the company must be stated. The objects comprise of a main objects clause and a number of other clauses governing the activities of the company. Section 3A of the Companies Act 1985 permits the use of a shortened form of the objects clause which many newly registered companies adopt. Composing an extended main objects clause takes research and great care to ensure it is all embracing within the industry and related activities of the company to avoid the possibility that the company may do business outside its stated objectives. The objects clause should also include all the activities a company may engage in to enable the main objects of the company to be carried out.

4. The Memorandum of Association must include a statement that the liability of the members is limited.

5. A limited liability company that is limited by shares must also state the amount of share capital the company proposes and the division of those shares into fixed amounts. For example, the share capital of the company is 1,000 pounds divided into 1,000 shares of 1 pound each.

6. The Memorandum of Association must also contain a clause regarding the subscription of the initial members of the company. This clause must state the name of each member, their address and description. A minimum of two members are required to register a new private company, the number of shares each subscriber is subscribing to and each subscriber should also sign the memorandum under their allocated shares.

7. The signatures of the subscribers to the Memorandum of Association must also be witnessed by a third party. No special qualifications are required by the third party witness except that the third party must be able to sign on the basis that the document has been signed by the subscribers who are who they say they are.

Whenever a new company is formed in the UK a Memorandum of Association must be supplied with the company formation documents that include Companies House forms 10 and 12 and the Articles of Association. Companies House forms 10 and 12 can be obtained from many sources include Companies House free of charge. In addition most newly formed companies who submit the details for company registration also adopt a standard set of Articles of Association, called Table A. Technically Companies house do not require a copy of Table A to be submitted to them with the company registration if Table A is to be adopted. If the Articles of Association are not submitted then the company registration documents must include a letter advising Companies House that the new limited liability company wishes to adopt the standard Table A, Articles of Association as required under the appropriate Company Law un-amended.

Following the limited company formation a company may change the main objects clause of the Memorandum of Association by passing a special resolution that has to be approved by the members at an extraordinary general meeting. Details of the special resolution and a copy of the new Memorandum of Association are required to be registered with Companies House.

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