Company law revision question and answer

Janet and Jackson Onyango are forming a Limited Liability Company. They are seeking your legal advice on the issues listed below. Respond to the enquiries Janet and Jackson Onyango on:

a) What are the Memorandum and Articles of Association and is there a difference between the two (5 marks)

b) What details would you expect them to contain and what other information might you be able to give about these details?

Answer
a) Memorandum of Association
• This is one of the constitutive documents. It is the external constitution of the company. It provides for the relationship between the company and third parties.
• It is a mandatory document – every company must have it.
• Its contents are prescribed Section 5 and 6 of the Companies Act e.g. name, object, capital.

Articles of Association
• This is one of the constitutive documents. It provides for the internal constitution. It contains the rules for the internal management of the company‟s affairs. It regulates the relations between the company and itsmembers.

Main difference between the two
• The Memorandum of Association provides for the relationship between the company and the outside world while the Articles of Association provides for the rules of internal management of the company‟s affairs.

b) Details in the memorandum of association
Contains the following clause:
• Name clause –name of the company with limited as the last word thereof.
• Object clause –the purposes for which the co is incorporated.
• Registered office clause –this is the domicil of the company.
• Capital clause –this is the authorised or nominal capital.
• Liability clause –states that the company is limited shares or guarantee.
• Association clause/declaration clause –states the desire of members to beincorporated.
• Particulars of subscribers and signature
• Date – the memorandum must be dated.
Details in the articles of association
Assuming the company adopts the model article in Table A of the first schedule to the Companies Act, the Articles of Association must contain inter alia.
• Transfer and transmission of shares.
• Calls
• Meetings generally.
• Declaration and payment of dividend.
• Powers of directors
• Office of the Managing Director
• Bonus issues
• Winding up
• Voting
• Lien on shares

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