The Memorandum of Association sets out the company's name, where its registered office is situated (which must be in England and Wales), the fact that the liability of members is limited, its share capital and the purpose for which the company is set up (its objects and its powers).
The Articles of Association of the company are the internal rules of the company. They create a contract between the members or owners of the company and the company itself. If no Articles of Association are filed when the company is incorporated a statutory standard form of articles will apply. In practice, the statutory articles are amended to suit a company's specific requirements. The Articles deal with such matters as the creation, issue, allotment and transfer of shares, the company's borrowing limits and the powers and duties and regulations of directors.
With effect from 1 October 2009, the Companies Act 2006 will introduce major changes to these documents. As a result of the changes the importance of the Memorandum of Association will be greatly reduced. This document will be little more than confirmation of the fact that the initial shareholders wish to form the company and that they have consequently agreed to become members of that company. Revised model forms of Articles of Association will also be introduced which, for private companies in particular, will be much simpler than the existing model form to reflect the simplified legislative framework introduced by the Companies Act 2006