The document that governs everything.
WHAT IT IS
The memorandum and articles of association, setting out the company's objects and internal rules.
WHY IT MATTERS
It governs how decisions are made and what the company may do.
WHAT THE OBJECTS DO
State what the company is established to do.
WHY THEY MATTER
Acting outside them can create difficulties.
WHAT TO ESTABLISH
That your objects cover what you actually do.
WHAT THE ARTICLES TYPICALLY COVER
Share classes and rights How shares are issued and transferred
Directors: appointment, removal, powers, meetings
Shareholder meetings and voting Dividends Borrowing powers Winding up
WHY TRANSFER PROVISIONS MATTER MOST IN SMALL COMPANIES
They determine whether a shareholder can sell to an outsider.
WHAT TO ESTABLISH
Whether pre-emption rights apply.
WHAT PRE-EMPTION MEANS
Shares must be offered to existing members first.
WHY IT PROTECTS
It prevents an unwanted party acquiring a stake.
WHAT MANY COMPANIES USE
Standard articles adopted at registration.
WHAT THAT MEANS
Nobody read them, and they may not suit the situation.
WHAT TO DO
Read them, and amend if they do not fit.
HOW AMENDMENT WORKS
By special resolution, and filing.
WHAT TO CONSIDER ADDRESSING
Deadlock between equal shareholders What happens on a shareholder's death Restrictions on competing Transfer restrictions
WHAT TO KEEP
The current version, and every amendment.
