Memorandum and articles of association explained

Memorandum and articles of association are required documents for limited companies in the UK. Between them, they define how a business is structured and how the day-to-day operations should be carried out. 

What is a memorandum of association?

A memorandum of association (MOA), sometimes referred to as the charter of a company, is a single-page document that outlines a company structure and contains information such as who is involved, the role they hold, and the activities of the business. Filling out an MOA is a requirement for all limited UK companies, and you’ll have to complete the document during the registration process.

The MOA must include information that follows a specific structure, meaning that the details given must adhere to required fields. However, the information provided in every company's MOA will be unique to their business. There are a total of 6 clauses to complete that cover the following information:

Registered company name

The legal and recognised name of the company which must be unique and end in the word ‘limited’ or ‘private limited’ depending on your company type. It also cannot contain sensitive words or expressions without prior approval.

Company location and address

The legal registered office address of the company which must be within the same location of where you’re registering the business. For UK companies, you will need an address that corresponds to the area in the UK the business is registered, such as England, Scotland or Northern Ireland.

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Company objectives

The purpose of the business and the activities it will undertake. This should define what objectives the company will be pursuing and helps to determine if a company is participating in the activities it has set out in the MOA.

Company liability

A confirmation of the company's liability, such as whether it’s a public liability company or a limited liability company.

Capital and share allocation

The total share allocation of the company and the maximum amount of capital that can be raised in relation to distributed shares. The total number of shares issued must be accounted for between the shareholders detailed in the MOA.

Subscription clause

A signed confirmation from those setting up the company that the information given within the MOA is accurate. This will also include information such as the signee names, their address, occupation and the number of shares they have been allocated.

When registering your business online, you’ll be asked for all of the required information

What are articles of association?

Articles of association (AOA) are documents that define how a company should be run, its procedures, and its day-to-day activities. The information within AOA can be considered as company laws that should be followed by everyone involved in the company. It will primarily refer to how directors and senior members should act, but it will directly impact how the entire business operates.

Articles of association may follow a similar structure between companies, but they can be entirely unique if required. Unlike the MOA, which must follow a specific format, AOA can be much more detailed and broad on the company information they cover. Some of the most common information included is as follows:

Decision making procedures

How decisions should be made, how conflicts are handled and resolved, and other rules relating to how the business makes high-level decisions.

Powers and responsibilities

The responsibilities that the directors of the business hold and their powers in decision-making, voting rights, calling meetings, etc.

Company shares

The types of shares issued, how shares can be distributed, sold, transferred or reallocated.

Profit distribution

How the business distributes its profits, such as through dividend profits, issuance of additional shares, or how and when profits can be retained to support business operations rather than being paid out.

Changes in directorship

When, how and who can terminate and appoint new directors, including the process that must be followed for this to happen.

Company secretaries

Whether a company secretary has been allocated as well as the powers and responsibilities they hold, such as taking meeting notes, filing accounts etc.

Administrative duties

The administrative duties of the company and who is responsible for completing them and ensuring that they’re up to date.

Standardised AOA can be utilised to help companies without any unique requirements register their UK company

Model articles of association

Model articles are available for companies that do not wish to create unique AOA for their company. These articles are standardised documents that can be adopted by limited companies and serve as a basic structure for the way their business is run.

Many small businesses will adopt the model articles because creating custom articles can be timely, confusing and expensive. It’s also not advised to create your own articles of association without legal advice or prior experience due to the importance of the articles. However, updating your articles can be done at any time, so new businesses have the option to register their company using model articles and introduce custom articles if they’re required in the future.

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Allan Chester