The memorandum of association of company, often simply called the memorandum (and then often capitalised as an abbreviation for the official name, which is a proper noun and usually includes other words) is one of the most important documents and must be drafted with care. It has to be filed with the Registrar of Companies during the process of incorporation of a Company. It contains the fundamental conditions upon which the company is allowed to operate.Its purpose is to enable shareholders, creditors, and those who deal with the company to know what is its permitted range of enterprise. It informs all persons what the company is formed to do and what capital it has to do with. It is the document that regulates the company’s external affairs. It is one of the documents required to incorporate a company in the United Kingdom, Ireland, Canada, Nigeria, India, Nepal, Bangladesh, Pakistan and Sri Lanka, Tanzania and is also used in many of the common law jurisdictions of the Commonwealth.
Contents
Requirements
While it is still important to file a memorandum of association to incorporate a new company, it forms part of the company’s constitution and it contains limited information compared to the memorandum that was required prior to 1 October 2010. The Companies (Registration) Regulation 2008 in fact included pro-forma Memoranda.
It is basically a statement that the subscribers wish to form a company under the 2006 Act, have agreed to become members and, in the case of a company that is to have a share capital, to take at least one share each. It is no longer required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the location of its registered office, the objects of the company, and its authorized share capital. Companies incorporated prior to 1 October 2009 are not required to amend their memorandum. Those details which are now required to appear in the Articles, such as the objects clause and details of the share capital, are deemed to form a part of the Articles.
Capacities
The memorandum no longer restricts the activities of a company. Since 1 October 2009, if a company's constitution contains any restrictions on the objects at all, those restrictions will form part of the articles of association.
Historically, a company's memorandum of association contained an objects clause, which limited its capacity to act. When the first limited companies were incorporated, the objects clause had to be widely drafted so as not to restrict the board of directors in their day to day trading. In the Companies Act 1989, the term "General Commercial Company" was introduced which meant that companies could undertake "any lawful or legal trade or business."