A Private Limited Liability Company's Constitution
A. MEMORANDUM OF ASSOCIATION
1. This is the Company’s constitution with the outside world, ie. its powers to deal with the outside world, i.e. what a company can do as it is a legal person!
2. For example to buy, sell and own property or take a lease of the same.
3. To trade as a business, for example to trade as a restaurant serving hot food and liquor, both activities requiring licences from the local council.
4. To open bank accounts and to handle money (but not as a bank!)
B. ARTICLES OF ASSOCIATION
1. This is the shareholders’ constitution or agreement between themselves as owners of the Company as to how the company is to function , i.e. internal rules.
2. Board of directors governing the way a company is run.
3. Company meetings: Board meetings and Shareholders’ meetings - MUST have an Annual General Meeting once a year, also to make big decisions for the Company
4. Share capital and structure eg a share capital of one hundred pounds divided into 100 X one pound ordinary shares and voting rights
5. The rules of share transfers: in a private company, initially to restrict the transfer of shares to existing members of the Company before selling to the outside world, i.e. to anybody on the open market.