This is in the Memorandum and the Articles of Association. The Memorandum covers the external aspects of the company whilst the Articles, which are subordinate to the Memorandum, cover internal regulation.
The contents of the Memorandum
The Memorandum of a private company limited by shares must state:
(i) the name of the company;
(ii) whether the registered office of the company is situated in England, Scotland or Wales;
(iii) the objects of the company;
(iv) the liability of the members if limited;
(v) the share capital with which the company is to be registered and its division into shares of a fixed amount.
It must be signed by the subscribers who must agree to take the number of shares indicated opposite their respective names. The Memorandum for a public limited liability company contains an extra clause (ii) stating that it is a public limited company.
The name clause
The last word(s) of the registered name must be either ‘limited’ or ‘public limited company’ depending upon its status.
Directors or shadow directors during the 12 months prior to a company going into insolvent liquidation are prohibited from using a name if it is a name by which the liquidating company was known at any time in that 12 month period. The restriction operates for five years from the commencement of the liquidation. The legislation is to stamp out the ‘phoenix company’ where the controllers place a company in liquidation and immediately form another company with the same or a similar name and recommence business, often with the same assets.
Change of name
A company may change its name voluntarily by special resolution.
The change is operative from date of the issue of a new Certificate of Incorporation.
Common law restrictions on choice of name: ‘passing off’
If a company name is so similar to the name of an existing company or business, the court may issue an injunction to restrain the carrying on business under that name: Ewing v. Buttercup Margarine Co. Ltd [1917]. But a company having a word in ordinary use as part of its name cannot prevent another company from using the same word: Aerators Ltd v. Tollitt [1902].
The registered office clause
This establishes the domicile/nationality of the company. The clause only states that the registered office is situated in England, Scotland or Wales and does not give the address which is separately supplied at the time of registration, the place where the registered office is situated cannot be altered.
The registered office is the official address at which legal documents, notices and other communications can be formally presented. Statutory books must be kept there and be available for inspection by members free of charge during business hours for at least two hours a day.
The capital clause
The clause states the registered or authorised capital of the company and its division into shares of a fixed nominal value but does not indicate the actual capital raised. It establishes the ceiling beyond which the company must pass a resolution to increase its authorised capital; companies can increase, consolidate, sub-divide or cancel shares or convert them to stock by ordinary resolution.
Company Promoters
A promoter is ‘one who undertakes to form a company with reference to a given project, and to set it going, and who takes the necessary steps to accomplish that purpose’: Twycross v. Grant (1877). The definition excludes persons acting in a professional capacity in connection with the formation of a company, such as solicitors, accountants and so on.
Promoters are not entitled to remuneration from the company and are personally liable for the expenses of the promotion. Any pre-incorporation contract for remuneration is void and unratifiable after the company is incorporated. The articles usually give directors a discretionary powerto pay the promoter’s expenses and the promoter will usually be one of the first directors.
