Do I need a Company Memorandum & Articles of Association document for my business?
Mar 30, 2018
Whether you are setting up a new company or choosing to incorporate after years of sole trading, there is no escaping the formality that goes with acquiring limited company status.
The idea of creating this legal entity, with all the responsibilities that go with that, can be daunting. But don’t be put off. There may be good commercial reasons to incorporate your business (make it a limited company), not least the potential tax advantages and perhaps an improved customer perception about the professionalism of your set-up. And with the right legal support, it can be a very simple process.
One of the key formalities that your lawyer will discuss with you is the need for a Memorandum and for Articles of Association. These are two documents that all new companies must have. It’s a legal requirement.
There is no reason why anyone who hasn’t been involved in running a limited company should know what these documents are and why it’s so important to have them. But the answer is that they are there for regulatory and constitutional reasons, and they’re a good point of reference when it comes to the company’s inner workings.
A Memorandum contains the details of the original shareholders or guarantors (depending on whether the company is limited by shares or by guarantee) as at the time the limited company was formed.
The Articles of Association, usually known simply as ‘Articles’, are more extensive. They set out rules about how the company should be run, and about how the roles of those involved in the company should play out. Typically, Articles deal with the rights and powers of company directors and shareholders/guarantors, together with the steps that need to be taken when it comes to voting, issuing shares and distributing profits. This is all crucial boundary-setting, and should provide solid foundations on which to build a limited company’s future.
It’s crucial that you get all of this right. And having a trusted corporate lawyer by your side will ensure that not only will you meet your legal responsibilities, but that your company is commercially and operationally sound from the outset.
So, why not contact a member of our Business team today on 01264 353411, email: email@example.com or fill in our no obligation enquiry form and a member of our team will be happy to run through what you need for your new business start up.
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