What are memorandum and articles?

The memorandum and articles are a company's constitution. They are two separate documents (the memorandum of association and the articles of association) but they are usually printed and bound together as one.

CA 1985, sec1 states that every company must have a memorandum of association. The memorandum of a private company limited by shares must contain the following clauses:

Company name;
The country of situation of the registered office;
The objects;
A statement that the liability of the members is limited;
The amount of authorised share capital;
An association and subscription clause which states that the subscribers (i.e. those signing) wish to be formed into a company and that they agree to take a specified number of shares in the company. The subscribers are the founder members of the company.

The memorandum must be signed by at least one subscriber who signs in the presence of a witness and who agrees to take at least one share.

The memorandum of a public company is only slightly different. There is an additional clause stating that it is a public company, and there must be at least two subscribers.

A company limited by guarantee also has a similar memorandum. There is, however, no authorised capital clause (a company limited by guarantee does not have a share capital), but there is an additional clause stating the terms of the members' guarantee. Many such companies also have clauses preventing the distribution of profits or assets to the members, though these are not essential.

The articles contain the detailed rules for the running of the company. Many companies have articles based on Table A, a standard set of articles for a company limited by shares. Many provisions in Table A suit the majority of companies, but most companies have some provisions in their articles which are different from those of Table A. Articles are commonly set out in short form, that is by stating that the articles are those of Table A except for a list of amendments. If many of the terms of Table A are varied, or if the company is a PLC, then long form articles setting out every provision may be used.

CA 1985, sec8 provides that the terms of Table A apply to every company except insofar as they are not excluded, and it is possible to register a company without articles in which case the company has all of Table A as its articles.

Table C provides a version of Table A for use by companies limited by guarantee.

CA 1985, sec14 provides that the memorandum and articles, once registered, bind the company and its members to the same extent as if they were a contract under seal entered into by the company and all the members (whether they were parties to the original subscription of the company or not). This gives the memorandum and articles their legal effect, allowing the parties to enforce the terms of the articles. There are, however, limitations to the enforceability of the memorandum and articles under the complex rule in Foss v. Harbottle. The terms of this complex rule are presently outside the scope of this database.

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