Company incorporation & constitution (articles, memorandum)

BLP.03 — Company Incorporation & Constitution

Incorporation under the Companies Act 2006

• One or more persons can form a company by subscribing to a memorandum and complying with the registration requirements (s.7). Choose the company type, name, registered-office jurisdiction, officers and constitution.
• The memorandum is a prescribed, authenticated document stating that the subscribers wish to form a company and agree to become members. Only where the company will have share capital must they also agree to take at least one share each (s.8).
• Deliver the memorandum, registration application and required documents to Companies House, with a statement of compliance (ss.9, 13). The application includes the proposed name, registered-office jurisdiction, whether liability is limited and, if so, by shares or guarantee, private or public status, and the subscribers' statement that they wish to form it for lawful purposes.
• Include a statement of capital and initial shareholdings if there will be share capital, or a statement of guarantee for a guarantee company; a statement of proposed officers; and a statement of initial significant control (ss.9–12A).
• Include an appropriate registered-office address and registered email address, the company type and intended principal business activities, and proposed articles to the extent the relevant Model Articles will not apply by default (s.9(5)).
• The officers statement includes the subscribers' confirmation that those named consent to act. Since 18 November 2025, it must also confirm identity verification for each individual proposed director (s.12(2A)–(3)). Do not assume that every enacted ECCTA provision has commenced; apply the requirements in force at the relevant law date.
• The certificate of incorporation is conclusive evidence that the Act's registration requirements were complied with and that the company is duly registered (s.15(4)). From incorporation, the subscribers and later members form a body corporate (s.16), a legal person separate from its members (Salomon v A Salomon & Co Ltd [1897] AC 22).
• A company formed as public must obtain a trading certificate before doing business or borrowing (s.761). The allotted nominal share capital must meet the authorised minimum of £50,000, or the prescribed euro equivalent (s.763); public-company shares are normally allotted paid up as to at least one-quarter of nominal value and all of any premium (s.586). Incorporation and permission to trade are separate steps.

Memorandum, articles and constitution

• The modern memorandum records the subscribers' formation commitments; it is not the company's continuing rulebook and is not listed as part of the constitution in s.17. Provisions of an old memorandum that would now belong in the articles are treated as articles (s.28).
• The constitution includes the articles and the resolutions and agreements within s.29, such as special resolutions (s.17).
• The articles regulate the company's internal affairs. On formation of a limited company, the relevant Model Articles apply if no articles are registered, and also to the extent registered articles do not exclude or modify them (s.20). Use the model for that company type in force on its registration date; bespoke articles do not necessarily displace every model provision.
• Articles bind the company and its members as a statutory contract (s.33). Members enforce rights in their capacity as members, not merely rights granted to them as outsiders in another role (Hickman v Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881). Naming someone in the articles as the company's solicitor does not itself give that person an enforceable outsider contract.

Objects, capacity and directors' authority

• Objects are unrestricted unless the articles specifically restrict them (s.31). An objects amendment is not effective until the registrar enters notice of it on the register (s.31(2)).
• Company capacity: an act's validity cannot be challenged for lack of capacity arising from the constitution (s.39), subject to the special provisions for charities. An internal objects restriction is not generally a defence to the company's external obligation.
• Directors' authority: in favour of a person dealing with the company in good faith, the directors' power to bind it is deemed free of constitutional limits (s.40). Good faith is presumed, and knowledge that an act exceeds the directors' constitutional powers is not by itself bad faith. There is no duty to investigate those limits.
• Internally, the limits still matter. Members may seek to restrain an act beyond the directors' powers, except an act fulfilling an obligation arising from a previous company act; directors' liability for exceeding their powers remains (s.40(4)–(5)). Do not confuse a company's capacity, the board's constitutional powers and an individual agent's authority.
• Insiders (s.41): where a transaction's validity depends on s.40 and the parties include a director of the company or of its holding company, or a person connected with such a director, the transaction is voidable at the company's instance. Whether or not it is avoided, that party and any director who authorised the transaction must account for any gain and indemnify the company for any loss; a person liable who is not a director of the company escapes that liability by showing that, when the transaction was entered into, they did not know the directors were exceeding their powers (s.41(2)–(3), (5)). The right to avoid is lost if, for example, restitution is no longer possible, the company has been indemnified, rights acquired in good faith, for value and without actual notice by a non-party would be affected, or the company affirms the transaction (s.41(4)).

Changing the constitution

• Articles may be amended by special resolution, requiring at least 75% under the applicable voting rules (ss.21, 283).
• The amendment power must be used properly. The usual test is good faith in the company's interests (Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656). Shareholders, rather than the court, assess benefit, subject to the limit that no reasonable person could consider the change beneficial. Harm to a minority does not by itself invalidate a good-faith amendment. Where the amendment concerns a matter in which the company as an entity has no interest and is only for the benefit of shareholders as such, it can be valid even though it does not benefit the company, provided it does not amount to oppression of the minority, is not otherwise unjust and is within the scope of the power. The challenger bears the burden (Arbuthnott v Bonnyman [2015] EWCA Civ 536, [90]).
• Entrenchment (s.22): articles may require a procedure or condition more restrictive than a special resolution for specified provisions. This does not prevent amendment by agreement of all members, or by a court or other authority with power to alter the articles. Notify the registrar when the articles contain, gain or lose entrenchment (s.23). Section 22(2)'s enacted restriction on introducing entrenchment has not been commenced; do not treat it as operative law.
• An existing member is not bound by a later articles alteration requiring more shares to be taken or subscribed for, or increasing liability to contribute capital or pay money to the company, unless that member agrees in writing, before or after the alteration (s.25).
• Send amended articles to the registrar within 15 days after the amendment takes effect (s.26). Send a special resolution within 15 days after it is passed (ss.29–30). These are distinct filing duties and start dates; default can be an offence by the company and officers in default.
• A company can change its name by special resolution or another method its articles permit (s.77). Buying an existing “shelf” company does not create a new legal person: changes to its name, officers and constitution still require the relevant procedures and filings.

After incorporation and common traps

• Keep the company's register of members (s.113). Have share certificates ready within two months of allotment, subject to the statutory exceptions and conditions of issue (s.769).
• Since 18 November 2025, companies no longer maintain their own statutory registers of directors, directors' residential addresses, secretaries or PSCs. Companies House holds the information, and notification obligations remain. For example, notify a director's appointment or cessation within 14 days (s.167G); see BLP.05 for identity-verification transitions.
• A private company need not have a secretary (s.270); a public company must (s.271). Company-name endings have Welsh alternatives and statutory exceptions; ordinarily a private limited company uses Ltd and a public limited company plc (ss.58–60).
• Contracts made for a company before it exists generally bind the person purporting to act for it, subject to an agreement to the contrary (s.51). Later incorporation does not itself make that person disappear from the contract. See BLP.02.

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