By Lynne Gowers on 16th February 2018

Setting up a limited company – what are the Memorandum and Articles of Association?

limited company

If you are in the process of setting up a limited company or you are already the owner of an incorporated business, you’ve probably come across the (somewhat grandiose) term “Memorandum and Articles of Association”. But what exactly are these documents and why do you need them when you start a new business?

The quickie definition!

In short, a limited company’s Memorandum of Association contains the names of all the subscribers; these are the people who were there when the company was founded, such as the initial shareholders. The Articles of Association are basically a set of guidelines on how the company is to be managed.

The Memorandum of Association

Every limited company must have a Memorandum of Association in place, it comes in a standard Companies House format and confirms every shareholder’s intention to hold at least one share in the company. The information contained in the Memorandum contains:

  • Company name
  • Date of incorporation
  • Type of company
  • Act under which the company is registered
  • Names and signatures of all subscribers (original shareholders or guarantors)
  • Limited liability of shareholders or guarantors

Once your company is incorporated, you can not amend the Memorandum of Association, even if a person leaves the company or changes their name.

The Articles of Association

All limited companies must have Articles of Association – these lay out how the company is run, governed and owned by the members.

There are default Articles (“Model Articles of Association”) issued by Companies House, however you can choose to submit your own, as the model Articles are quite prescriptive.

The Articles should detail the following:

  • Directors’ powers, responsibilities, decision making, appointment and removal, indemnity and insurance
  • Shares, distribution of shares and Dividends
  • Capitalisation of profits
  • Shareholders
  • General meetings
  • Voting rights

You can change the articles after incorporation but this can only be done by special resolution where the company shareholders have to agree the changes and the amended document must be submitted to Companies House within 15 days of the date of resolution.

Your responsibilities as a limited company Director

As well as getting your head around the jargon, when you set up a limited company, you have some legal obligations to get to grips with, to both Companies House and HMRC.

These include:

  • Keeping records and reporting changes
  • Filing annual accounts and company tax returns
  • Submitting an annual compliance statement
  • Paying corporation tax
  • Registering for self-assessment and submitting an annual self-assessment tax return
  • Registering for VAT when required and submitting VAT returns once registered

Help setting up a limited company

There are many benefits of running your business as an incorporated entity.
If this is something you are considering, we can help you get your company up and running in no time. Find out more

Alternatively there is a load more useful information about setting up and running a limited company in our free guide, which you can download by clicking the link below.

Lynne Gowers Written by Lynne Gowers

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