ACCA F4 - Corp and Business Law (ENG)

210 14: Constitution of a company  Part D The formation and constitution of business organisations

Study guide

Intellectual level

D The formation and constitution of business organisations^

4 The formation and constitution of a company

(e) Analyse the effect of a company's constitutional documents 2

(f) Describe the contents of model articles of association 1

(g) Explain how articles of association can be changed 2

(h) Explain the controls over the names that companies may or may not use 2

Exam guide

A company's constitution could easily be examined in either a knowledge or an application question. You

may be asked to explain any of the constitutional documents and how they may be altered.

1 Memorandum of association

The memorandum is a simple document which states that the subscribers wish to form a company and

become members of it.

Before the Companies Act 2006, the memorandum of association was an extremely important document

containing information concerning the relationship between the company and the outside world – for

example its aims and purpose (its objects).

The position changed with the 2006 Act and much of the information contained in the old memorandum is

now to be found in the Articles of Association, which we will come to shortly. The essence of the

memorandum has been retained, although it is now a very simple historical document which states that

the subscribers (the initial shareholders):

(a) Wish to form a company under the Act, and

(b) Agree to become members of the company and, to take at least one share each if the company is

to have share capital.

The memorandum must be in the prescribed form and must be signed by each subscriber.

It has been deemed by the Companies Act 2006 that companies which were incorporated under a

previous Act and whose memorandum contains provisions now found in the articles, shall have these

provisions interpreted as if they are part of the articles.

2 A company's constitution

A company's constitution comprises the Articles of Association and any resolutions and agreements it

makes which affect the constitution.

According to the Companies Act 2006, the constitution of a company consists of:

 The Articles of Association

 Resolutions and agreements that it makes that affects the constitution

We shall consider resolutions and agreements first. This will help explain how the Articles of Association

are amended.

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