MEMORANDUM OF is the name given to the deed which, in effect, operates a.s both the creator and the charter of a company incorporated under the Companies Acts. The memorandum is the fundamental and (except in certain specified particulars) the unalterable law of such a company ; and the latter is incorporated only for the objects and purposes expressed in that memorandum. It should be subscribed by at least seven persons (or ‘Ihere the company is to be a private company, any two or more persons), and any of these may be a married woman, an alien, a bankrupt, and probably even an infant. An incorporated company may subscribe as such, but a partnership firm can only do so by its members individually. The subscribers should write their names in full, together with a description of their occupations, and opposite each signature must appear the number of shares in the company which the subscriber agrees to take. It is by the memorandum that the liability of the shareholders in the company is limited. Their liability may be so limited either as to the amount, if any, unpaid on the shares they hold, or to such amount as they may thereby undertake to contribute to the assets of the company in the event of' its being wound up. III the former ca.e the company is said to be " limited by shares ' ; in the latter it is " bv guarantee." It may also be an " unlimited company," that is to say, w iihout limit to the liability of its members. The statutory provisions under which the system of limited liability was inaugurated were not merely for the benefit of the shareholders for the time being in a company, but were intended also to provide for the interests of two other very important bodies; in the first place, those who might become shareholders in succession to the persons mho were shareholders for the time beino; and secondlv, the outside public, and more particularly those who inigrit be creditors tif companies of this kind. Of the internal regulations of the company the members of it are absolute masters, and, provided they pursue the course marked out in the Companies Acts, they. may alter those regulations from tiine to time; but everything in the way of such alteration must be done subject to the conditions contained in the memorandum. The latter overrides and overrules any provisions of the articles which may be at variance with it. 'The memorandum, said Lord Cairns, in Ashbury v. Riche, is " as it were the area beyond which the action of the company cannot go : inside that area the shareholders may make such regulations for their own government as they think fit." Where a company is formed on the principle of being liinited by shares, the memorandum must contain the following things :—(1) The name of the proposed company, with the addition of the word "limited" as the last vrord in such name; (2) the part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate; (3) the objects for which the proposed company is to be established ; (4) a declaration that the liability of the members is limited; (5) the amount of capital with which the company proposes to be registered divided into shares of a certain fixed amount. But no subscriber can take
less than one share. A reference to the form of memorandum set out in the article on COMPANIES will show how these requirements are satisfied in practice. In the case of a company limited by guarantee the memorandum should contain the following things :—(1) The name of the proposed com pany, with the addition of the word " limited" as the last word in such name ; (2) the part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate; (3) the objects for which the proposed company is to be established ; (4) that the liability of the members is limited ; (5) a declaration that each member undertakes to contribute to the assets of the company, in the event of its being wound up, during the time that he is a member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before the time at which he ceases to be a member, and of the costs, charges, and expenses of winding-up the company, and for the adjustment of the rights of the contributories amongst themselves, such amount as may be required, not exceeding a specified amount. If the com pany has a share capital—(1) the memorandum must also state the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount ; (2) no subscriber may take less than one share; each subscriber must write opposite his name the number of shares he takes. In the case of an " unlimited" company, or one formed on the principle of having no limit placed on the liability of its members, the memorandum need only contain—(1) The name of the proposed com pany ; (2) the part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company is proposed to be situate; (3) the objects for which the proposed company is to be established. In this case, too, no subscriber may take less than one share, and each must write opposite his name the number of shares he takes. A company formed, without an intention to earn dividends, for the purpose of pro moting commerce, art, science, religion, charity, or any other useful object, can obtain a licence from the Board of Trade dispensing with the necessity for it to append to its title the word "limited." A memorandum must always be stamped with a 10s. deed stamp. When registered, it binds "the company and the members thereof to the same extent as if each member had subscribed his name and affixed his seal thereto, and there were in the memorandum contained, on the part of himself, his heirs, executors, and administrators, a covenant to observe all the conditions of such memorandum, subject to the provisions" of the Companies Acts. And more than that, all persons who have dealings with a company are presumed to have read the memorandum and so have a knowledge of its powers. Shareholders can require to be supplied with a copy by the company ; but any other member of the public is only entitled to inspect the memorandum and articles filed at Somerset House.