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Memorandum of Association
From Wikipedia, the free encyclopedia
The Memorandum of Association of a company, often simply called the Memorandum, is the document that governs the relationship between the company and the outside world. It is one of the documents required to incorporate a company in the United Kingdom and Ireland, and is also used in many of the common law jurisdictions of the Commonwealth.
A Memorandum is required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the objects of the company, its authorised share capital, and the subscribers (the original shareholders of the company). A company may alter particular parts of its Memorandum at any time by a special resolution of its shareholders, provided that the amendment complies with company law.
The objects of the company state what a company is permitted to do, and therefore limit its capacity to act. Since 1844, when the first limited companies were incorporated, the objects have become wider and more encompassing so as not to restrict the directors in their day to day trading. In the Companies Act 1989 the term "General Commercial Company" was introduced which meant the company could undertake "any lawful or legal trade or business."
If the Company is to be a non-profit making company limited by guarantee, there will be statement saying that the profits shall not be distributed to the members.
The Companies Act 2006, scheduled to come into force in October 2008, will simplify the company law of the United Kingdom, and in doing so will remove the requirements for an objects clause, leaving the Memorandum as a simple statement of certain facts relating to the company. Any limitation on capacity will thereafter be contained in the company's Articles of Association and will, if breached, be a purely internal matter potentially making directors liable to shareholders for any loss caused by the breach but not invalidating the act itself [1].
Since the 2000s in Australia, the Memorandum of Association and Articles of Association have been combined into a single document called the Constitution of the company.
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