In the past a Memorandum of Association was seen as vital in providing information relating to the external affairs of a company. The importance of this document diminished over time with legal developments. Its worth will be limited further in consequence of the Companies Act 2006 content. Discuss the accuracy of the above statement and analyse why the importance of the Memorandum of Association has diminished. The most comprehensive review of British company law ever to have been made began in March 1998 when the Department for Trade and Industry (DTI) set up an independent Steering Group which carried out what was formally known as the Company Law Review (CLR). The task of the CLR was to develop a simple, modern, efficient and cost effective framework for carrying out business activity in Britain for the twenty-first century. (Palmer, 2006: 48) One of the most interesting aspects of British company law that the Steering Group had to deal with was the fact that most of the law came from the middle of the nineteenth century and had developed very specifically to meet the demands of companies and business at that time. The law had failed to keep pace with changes in the economy and in society in the intervening years. Even in the past forty years, since 1962 when the Jenkins Committee carried out the last thorough review of company law, the business world had changed beyond recognition. With globalisation, the UK had to remain competitive in all fields and the complexity and overregulation of company law was a significant disadvantage to British Companies. The Government also recognised that the UK competed with other legal jurisdictions to attract companies and incorporations, especially large public corporations. An efficient company law would make the UK a more attractive jurisdiction in which new companies could incorporate. The CLR therefore vowed to bring forward proposals of a modern law for the modern world. (HMSO, 1998: cl.2.1) This is the context in which the Memorandum of Association will be explored in this paper. The very fact that the Memorandum exists implies that at one point it must have been important. Under section 2 of the Companies Act 1985 the Memorandum was required to contain a statement of the company’s name, the location of its registered office, a description of the company’s objects, and details relating to the capital of the company including whether it was limited by shares or by guarantee, who the guarantors were if any and the amount they were liable for, or details of the various classes of share, their value, and who the subscribers were. There is little doubt that such details are still important and require to be disclosed. However, the Companies Act 2006 significantly curtails what is to be disclosed in a company’s Memorandum of Association. Under section 8 of the 2006 Act the Memorandum must disclose that the subscribers wish to form a company, become its members, and if there is a share capital, that they will be shareholders.
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