The following sets out a very basic list of the types of matters which are covered within the “Memorandum of Association” and “Articles of Association” of a Trade Association which is “incorporated” (i.e. operating through a company structure). The “Memorandum of Association” sets out the purpose for which the company has been set up and the powers which it has in pursuit of those purposes (its “objects”) and the “Articles of Association” deal with its internal workings.
Developed by Bates, Wells & Braithwaite, the list of matters relating to what may appear in the Articles of Association is guide only and many such documents contain many more and more complex provisions.
1. Memorandum of Association
- Name of Trade Association
- Jurisdiction in which the Trade Association is registered
- The “objects” of the Trade Association (the reason for its existence).
- The “powers” of the Association (those things which it will lawfully be able to do, in pursuit of its “objects”).
- A statement that the liability of the Trade Association company’s “members” (analogous to do commercial company’s “shareholders”) in respect of the Trade Association’s debts on winding up is limited.
- A “guarantee” clause, under which the members of the company undertake to contribute a certain amount of money towards the debts of the Trade Association in the event that it is wound up – usually a nominal figure such as £1.
- A statement as to what will happen to the assets of the Trade Association upon its winding up or dissolution.
2. Articles or Association
- A clause setting out the definition of any terms in the document which have specifically–defined meanings within the rest of the document.
- A statement of who the company’s “members” are see above for an explanation of this term. The members have the right to attend, speak and vote at general meetings of the company through which the Trade Association operates. Their “Company law members” may be different from “associate members” or other classes of member which the Trade Association may create from time to time.
- A clause or clauses (“provisions”) setting out other types or “classes” of member (if there are to be any).
- Provisions setting out how a person becomes a Company law member of the Trade Association.
- Provisions dealing with how company law members or other types of member of the Trade Association cease to become members or are expelled.
- Provisions setting out membership fees and subscriptions.
- Provisions dealing with how general meetings of the “company law members” are called held and conducted.
- Provisions setting out how the “board” (possibly also called “the council” or some other names, depending on the internal language used within the particular Trade Association) is constituted. This includes how persons become members of the governing board, what particular functions they may carry out, minimum and maximum numbers of board members, how meetings are called, held and conducted, whether and how sub-committees of the board may be constituted and how board members may be removed.
- Provisions dealing with the production and filing accounts.
- Provisions dealing with how board members’ conflicts of interest are to be dealt with.
- Provisions as to how notices are to be sent to board members and company law members and how the Trade Association is to communicate generally with these persons.
- The Articles may include a set of “By-Laws”, setting out further particular rules relating to how the Trade Association’s operates.
From 1 October 2009, the constitutional provisions of companies’ memoranda of association listed at the top of this note will no longer appear in the memorandum of association. Instead, if the company was incorporated:
- after 1 October, then the provisions will have to appear in the articles of association instead; or
- before 1 October, then the law will treat those provisions of the memorandum as though they were actually in the company’s articles of association.
If someone asks a company for a copy of its articles of association after 1 October, but the company was incorporated before 1 October and the provisions treated as being in the articles are still physically set out in its memorandum, then the company should supply a copy of the memorandum as well as the articles.
At BWB we advise regularly on appropriate structures for trade associations and membership bodies. We would be delighted to offer you 20 minutes initial free advice on this or any other legal matter relating to your organisations. Please contact:
Jamie Huardon 020 7551 7866
Iain Cathcart on 020 7551 7734
Vanessa Williams on 020 7551 7787
Selman Ansarion 020 7551 7764
Bates Wells Braithwaite London LLP