Can I update my memorandum of association?
All UK limited companies are required to adopt a memorandum of association. In this blog, we explain the importance of this document and whether it can be altered later on.
We also discuss the articles of association, their significance, and whether they can be amended.
What is a memorandum of association?
During the incorporation process, all UK limited companies receive a memorandum of association, which, along with the articles of association, forms the company’s constitution. This constitution governs how the company is managed, defines the responsibilities of directors, and outlines the rights of shareholders, among other key aspects.
Section 8 of the Companies Act 2006 defines the memorandum of association as “a memorandum stating that the subscribers … wish to form a company under this Act, and … agree to become members of the company and, in the case of a company that is to have a share capital, to take at least one share each.” Simply put, this document confirms that the initial shareholders have agreed to form the company and become its shareholders.
Before October 2009, the memorandum of association was a crucial part of a company’s constitution, as it included an “objects clause” that defined the company’s purpose and outlined the activities it could engage in during its operations.
However, newly formed companies no longer need an objects clause, and any existing clauses have been incorporated into the articles of association. As a result, the memorandum of association now holds much less constitutional significance.
There’s no need to draft a memorandum of association, as it is automatically generated during the online incorporation process. However, for those applying by post, Companies House offers a template memorandum of association. This template can still be used to inform Companies House that each initial shareholder, known as a subscriber, agrees to:
- Form a company under the Companies Act 2006
- Become a member of the company
- Take at least one share in the company
What is the difference between the memorandum of association and the articles of association?
While both the memorandum of association and the articles of association are essential for forming a company and constitute its legal framework, their roles are quite different.
The memorandum of association serves primarily as a record of the company’s initial formation. In contrast, the articles of association are far more significant, as they directly influence the day-to-day operations of a limited company.
The articles of association establish various provisions that govern the management of limited companies, including:
- The powers and responsibilities of company directors
- Decision-making procedures for directors and shareholders, such as meeting quorums and voting processes
- The appointment, termination, and remuneration of directors
- The management of company shares, including the issuance of new shares
Can I update my memorandum of association?
Once the memorandum of association is generated during company formation, it cannot be changed or updated later on.
There is no need to update the memorandum of association, as it no longer includes the historic objects clause. After the company is formed, there is nothing in this document that requires further modification.
Is it possible to change my articles of association?
The articles of association can be updated, and in some cases, it may be necessary to do so.
While the model articles are usually sufficient at the time of incorporation, some companies may later choose to customize these provisions, for example, to enhance shareholder protection or to issue multiple share classes.
Under Section 283 of the Companies Act 2006, a company’s articles of association can be amended by passing a special resolution of the members. A special resolution requires at least a 75% majority of the total votes and can be passed either as a written resolution signed by the shareholders or by voting at a general meeting of the shareholders.
Once the special resolution is passed, a copy must be submitted to Companies House within 15 days. Additionally, a copy of the amended articles of association should be filed within 15 days of them taking effect. Depending on the changes, it may also be necessary to submit the following:
- statement of company objects – if the company is changing its objects in the articles of association
- change of constitution by enactment – if the change in the articles of association is due to a change in the law
- change of constitution by order of court or other authority – if a court or other authority has requested that the company changes its articles of association
Do you have any other questions?
So, you can’t update a Memorandum of Association after forming the company, as it’s a fixed historical record. However, if you need to reflect changes in company rules or shareholder information, you can update the Articles of Association or make adjustments through Companies House.
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