Memorandum and Articles of Association
Whenever a limited company applies for loans from banks, credit terms from suppliers or even as simple as opening a bank account, Memorandum and Articles of Association is one of the pre-requisite documents. Most business people know about this requirement but do know what are they for.
Why is this document so important?
This document governs the affairs of the limited company, consisting of 2 parts, with the first part being the Memorandum of Association and the second part being the Articles of Association. This document is issued during the incorporation stage of the company.
Memorandum of Association
This document defines the structure of the company. Main part of its contents:-
- Company name. Their names must end with “Sdn Bhd” for private limited company or “Berhad” for public limited companies.
- Address of the company’s registered address. Registered address is where the company’s registers, books and accounts are kept.
- Nature of business intended to be carried out by the company. Also called objects of the company.
- Specifically mention that the power of the company is set forth in the Third Schedule to the Companies Act, 1965.
- Specifically mention that the liability of the members is limited.
- Capital of the company. It mentions the nominal amount of the authorised share capital and the division of such capital into fixed amount units of shares.
The Memorandum of Association must be signed by at least 2 subscribers. Subscribers are the initial persons who must undertake to subscribe for one or more shares in the company.
Articles of Association
This document contains the company’s internal regulations, namely:-
- Adoption of regulations stated in Table A in the Fourth Schedule of the Companies Act, 1965.
- That the company is a private company as per Section 15 of the Companies Act, 1965.
- Specify the minimum and maximum number of directors.
- Names of first directors and first company secretary.
- Shareholding qualifications of each director, if any.
- Determining requirements for effecting directors’ resolutions.
The Articles of Association must be signed by the first directors. First directors are the initial persons who are first appointed as directors for of the company. First company secretaries are also carrying the same meaning, being the first company secretary appointed by the company.