This article explains how to amend the memorandum and articles of association.
The memorandum of association and articles of association are two vital documents, each serving important functions in a company’s administration. They are prepared during the incorporation process and remain in force until the company’s dissolution. When there is a need to amend either of the aforementioned, there are preset steps involved to guide legal practitioners on how the memorandum and articles of association may be amended.
What is a Memorandum and Articles of Association (MEMART) of a Company?
The Memorandum of Association is the most important document for the incorporation of a company. It is a legal document prepared during the formation and registration process, which defines the relationship of the company with shareholders and the public. Anyone seeking how to amend the memorandum and articles of association should first understand its structure and purpose. It defines the powers and duties of the company as a corporate entity, and must be submitted to the before a company can be incorporated. The memorandum outlines the company’s object, name, type [public or private], liability of members, restrictions of the powers of the company (if any), and the share capital.
The articles of association, on the other hand, serve as the company’s internal guidelines. It contains the internal regulations for the management of the affairs of the company. When considering how to amend the memorandum and articles of association, it is important to distinguish their respective roles. The articles determine how the powers conferred by the memorandum shall be exercised. Furthermore, they regulate the rights of members among themselves and set guidelines for the operation of the company. The Memorandum of Association and the Articles of Association are commonly referred to together as MEMART
Why do companies amend their MEMART?
As the company evolves, its governance and operational realities may outgrow the provisions it initially put in place. For this reason, companies must learn how to amend the memorandum and articles of association when changes arise. The MEMART can and should be amended when material changes occur that affect the company’s structure, ownership, or operations. Amendments ensure that the company’s legal framework remains aligned with its current objectives and regulatory obligations.
Some situations that require amendment of the MEMART:
- Change of the company’s Object or Business (which is a frequent reason for altering the memorandum or articles of association).
- Capital restructuring: When a company increases or reduces its share capital, creates new classes of shares, or alters the rights attached to existing ones, the share capital clause and related provisions of the MEMART must be updated, which may necessitate knowing how to amend the memorandum and articles of association effectively.
- Entry or exit of investors: Bringing in new shareholders, venture capital investors, or strategic partners often requires changes to the Company’s MEMART
- Adjust voting thresholds or quorum requirements for Board Meetings or General Meetings, which sometimes involves an amendment to the relevant articles or memorandum provision.
- Change of company name: In this situation, you would need to review how to amend the memorandum and articles of association properly.
- Change of corporate Structure: such as converting from private to public status or vice versa.
- Mergers, acquisitions, or group reorganisations: Where a company becomes a holding or subsidiary entity, or merges with another, the MEMART must be reviewed to reflect its new corporate position, objectives, and shareholding structure, often requiring expertise in how to amend the memorandum and articles of association.
- Redefine the powers and composition of the board of directors, which can necessitate steps on amending the memorandum and articles of association.
What Aspect of the MEMART can be amended?
The Common permissible amendments to the Memorandum include the most common question: how do you amend the memorandum and articles of association?
- Alteration or expansion of the objects clause.
- Changes to the authorised share capital (increase or, subject to further procedures, reduction).
- Alteration of the company’s name (subject to CAC name availability and approval).
- Changes relating to the limited liability clause or situation of the registered office (where applicable). Â Â –
Note: The subscription/Association Clause is Unalterable.
The common permissible amendments to the Articles include alterations governed by the rules for how to amend the memorandum and articles of association in accordance with company law.
- Provisions on appointment, removal, and powers of directors.
- Share transfer restrictions, pre-emption rights, and class rights.
- Quorum, voting, and meeting procedures.
- Dividend distribution, borrowing powers, and other internal management rules.
Note: The amendments must not contravene CAMA 2020, the Constitution, or other applicable laws, or the company’s existing contractual obligations. Consider statutory restrictions before you proceed to amend the memorandum and articles of association.
How to amend the MEMART of a Company (Step-by-Step Guide)
Step 1: Board of Directors’ Resolution
a). Directors convene a board meeting (or pass a written resolution where permitted) to approve the proposed amendments in principle and to recommend them to the members. Any director wishing to know how to amend the memorandum and articles of association should ensure all recommendations comply with governing law.
b). Authorise the company secretary or a director to prepare the notice of the general meeting and draft a special resolution.
Step 2: Notice of General Meeting
a). Issue formal notice to all members entitled to attend and vote, in accordance with the Articles and CAMA (minimum notice period, content of notice, and mode of service). This procedure applies when following the appropriate steps in how to amend the memorandum and articles of association.
b). The notice must clearly set out the proposed special resolution(s) and the text of the amendments.
Step 3: Convening and Holding the General Meeting
a). Hold the meeting (physical, virtual, or hybrid, as permitted by the Company’s Articles of Association and CAMA).
b). Ensure a quorum is present. Achieving quorum is crucial when you intend to amend the memorandum and articles of association.
c). Put the special resolution to a vote (show of hands or poll as applicable).
d). Record the proceedings accurately in the minutes.
Step 4: Passing the Special Resolution
a). Confirm that the resolution is passed by the requisite majority (this requires 3/4 majority vote). This step is a pivotal part of the process for how to amend the memorandum and articles of association.
b). Where class rights are affected, hold and obtain the necessary class consents.
Step 5: Preparation of Required Documents
a). Extract or certified true copy of the special resolution.
b). Amended version of the Memorandum and/or Articles of Association (clean and marked-up versions may be useful).
c). Completed CAC prescribed forms (currently relevant forms under the Companies Regulations for alteration of MEMART). Accurate completion is necessary for amending the memorandum and articles of association properly.
d). Statement of compliance or other supporting declarations as required.
e). Payment of the prescribed CAC filing fees and stamp duty.
Step 6: Filing with the Corporate Affairs Commission
a). Submit the documents electronically via the CAC portal within the statutory timeline (generally 15 days from the date of the resolution, subject to any applicable extensions or current practice).
b). Ensure that the company’s annual returns are fully paid and are up to date, as the CAC will not process alterations for non-complaints. Timely compliance will help to avoid delays while you amend the memorandum and articles of association.
Step 7: Issuance of CAC Confirmation and Updated Documents
a). Upon successful registration, the CAC issues an acknowledgment or updated certificate of Incorporation reflecting the amendment. This final confirmation marks the conclusion of the statutory process for how to amend the memorandum and articles of association.
b). Obtain certified true copies of the amended MEMART for the company’s records and for use with third parties (banks, regulators, counterparties).
Conclusion
Altering or amending a company’s Memorandum and Articles of Association goes beyond editing its content, but requires compliance with statutory requirements for doing so. For practical guidance, follow this step-by-step approach on how to amend the memorandum and articles of association.
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