When setting up a company it must have a Memorandum and a set of Articles of Association.
The Memorandum has five clauses that must appear, being the name, objects, registered office, liability and capital.
When choosing a company name it is important to check the index at the Companies Registry as a name cannot be used if there is already a company trading with that name or appears to be connected with the Government. It is also important to check the Trade Mark Index to ensure the proposed name is not already registered as a Trade Mark.
The Objects clause of the memorandum sets out the purpose for which the company is in business and what it is empowered to do.
Only the country in which the registered office is situated has to be stated in the registered office clause.
The capital clause figure is the amount of nominal (or authorised) capital of the company. It is the maximum nominal value of the shares which the company can issue and provides a ceiling for the issue of shares. Once all the nominal capital has been issued, no more shares can be allocated until the nominal capital figure in the memorandum has been increased and is done by an ordinary resolution of the members in a general meeting.
The Article of Association gives detailed instructions as to how the company is to work, which sets out the internal management structure. Therefore the articles can be referred to, to establish whether members or directors are permitted to do a proposed act. |
