2.4 Memorandum and articles of association

2.4 MEMORANDUM AND ARTICLES OF ASSOCIATION

Memorandum of association

It is a foundational document that sets out the company’s constitution and defines its relationship with the outside world. It contains fundamental information about the company, including:

Company name and registered office: The official name and address of the company.
Object clause: The primary objective or purpose for which the company is formed.
Liability clause: The type of liability that the members or shareholders have, such as limited liability in the case of a company limited by shares.
Capital clause: The authorized share capital of the company, i.e., the maximum value of shares that can be issued.
Association clause: The agreement of the initial shareholders or members to form the company and become its members.

Articles of association

The Articles of Association are the internal regulations that govern the internal management and operations of the company. They define the rights, duties, and powers of the company, its shareholders, and its officers. The Articles typically cover the following areas:

Shareholders’ rights and dividends: The rights attached to different classes of shares, dividend distribution, and procedures for issuing or transferring shares.
Directors’ powers and duties: The appointment, powers, and responsibilities of directors, including their meetings, decision-making process, and potential conflicts of interest.
General meetings: The rules and procedures for conducting general meetings of shareholders, including the annual general meeting (AGM) and extraordinary general meetings (EGMs).
Voting and resolutions: The rules for voting on company matters and passing resolutions, including the majority required for various types of decisions.
Borrowing powers: The authority of the company to borrow money, issue debentures, or create charges on company assets.
Winding up: The procedures and conditions for winding up or dissolution of the company.