If you’re in the process of setting up a limited company, you’d get a plethora of paperwork. Along with other papers, the documents necessary to set up a limited company in the UK under the Companies Act 2006 are a memorandum of association and articles of association.
In the first place, knowing and preparing these papers beforehand is crucial to alleviate the troubles that occur during the process. Once you are ready, you can subside the troubles to focus on your business growth.
Let’s explore what are these documents and why they are necessary for your limited company formation.
A Quick Overview
A memorandum of association is the legal document that you need to form a limited company. All initial guarantors and shareholders who agree to set up a company sign MOA. On the other hand, the articles of association are the set of guidelines to own, govern and run a company.
Memorandum of Association
The MOA is a single-page document that contains the names of all the founding members, including the shareholders and guarantors of a company who agree to set up a company. They add their names and sign on this document to state their intentions to form the company under the Companies Act and be a member of it. If a company is in need of share capital, they agree to own at least one share of it.
You must send this document to the Companies House along with the application of registration and the articles of association.
This document contains the following information:
- Name of the Company
- Incorporation Date
- Company Type
- Act under which the company is registered
- Names and signatures of all shareholders or guarantors
- Limited liability of shareholders or guarantors
Once you complete the incorporation process, you cannot alter the Memorandum of Association nor you can change or remove the name of the subscribers who left the company. And, it will always remain the same.
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Articles of Association
Limited companies must need Articles of Association that set out how a company is operated, governed and owned by the members. It is the rulebook that contains the rules for operating the company agreed by shareholders or guarantors, directors and the company secretary.
Furthermore, you can get default Articles known as Model Articles of Association that Companies House issue, however, you can choose to submit on your own, upload and send them when you register your company.
The articles of association include the following details:
- Directors’ duties, responsibilities, and powers
- Shares, distribution of shares and dividends
- Directors’ indemnity and insurance
- Capitalisation of profits
- Voting rights
- General meetings
- Profit distribution
- Directors appointment and removal
- Decision on the appointments of company secretary
- Administrative issues
You can get Model Articles as they’re prescribed by the Companies Act 2006. There are three different versions of these articles:
- Private companies limited by shares
- Private companies limited by guarantee
- Public limited company
In addition, you can amend the article of association, but for it, you need to do a special resolution taking the acknowledgement of shareholders on the changes and amendemends. Afterward, you must submit this document to Companies house within 15 days after the date of resolution.
To sum up, you need to know that if you’re setting up a limited company, you need to have both memorandum of association and articles of association. Additionally, during the process of company formation, you need to send the memorandum and article of association along with an application of registration to companies house for the incorporation process.
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Disclaimer: This blog is just for general information on MOA and AOA.