When incorporating a company in Nigeria, the Memorandum and Articles of Association (MEMART)are often treated as documents that simply need to be prepared, signed and uploaded to the Corporate Affairs Commission (CAC). However, your MEMART is more than incorporation paperwork. It forms part of the constitutional framework of your company and can determine important questions about its business, ownership and governance.

Memorandum vs. Articles: What’s the Difference?

The Memorandum of Association sets out the fundamental constitution of the company. It contains important information about the company, including its name, registered office, liability, share capital and the nature of the business or objects for which it is established.

The Articles of Association, on the other hand, primarily deal with the company’s internal management. They provide rules for matters such as directors, shareholders, meetings, voting, resolutions, share transfers and other aspects of corporate administration.

A simple way to think about it is this: the Memorandum establishes the company’s fundamental framework, while the Articles provide the rules for how the company is run.

The Corporate Affairs Commission (CAC) provides model Articles that companies can adopt. However, those model provisions may not address every company’s specific ownership or governance arrangements so it can be adopted either wholly or subject to modifications permitted by law.

So, what should you actually look out for when drafting your MEMART?

  1. Start With the Object Clause

One of the most important parts of the Memorandum is the object clause. Your objects should accurately reflect what the company is established to do. Don’t simply copy a generic list of business activities without considering the company’s actual business model. Think about what the company does today, what it is likely to do tomorrow and any reasonable areas into which it may expand.

  1. Be Intentional About the Shareholders

The people listed as subscribers and their shareholdings are not just filling spaces on a registration form. They establish the company’s initial ownership structure. Before finalizing the Memorandum, ask: Who should actually own the company? How many shares should each shareholder hold? Does the percentage ownership reflect the parties’ actual agreement? Are there different classes of shares or different rights attached to them? What happens if a new investor comes in later?

  1. Think About Voting Rights and Control

Ownership and control are related, but they are not always the same thing. When drafting your MEMART, consider how voting rights will operate and whether certain decisions should require ordinary approval, a higher voting threshold or the consent of particular shareholders. The question to ask is: if the shareholders disagree, who ultimately has the power to decide?

  1. Don’t Ignore Meetings and Resolutions

Your MEMART should work with the way you expect the company to make decisions. Consider provisions relating to general meetings and notices, quorum, voting at meetings, proxies, ordinary and special resolutions, written resolutions, where applicable; and, the matters requiring shareholder approval.

These provisions may seem routine when the company is being incorporated, but they become very important when shareholders need to approve a major transaction, appoint or remove directors, alter the company’s structure or make another significant corporate decision.

  1. Consider the Directors and Their Powers

The Articles should provide a clear framework for the company’s directors. Consider how directors will be appointed and removed, how decisions will be made at board meetings, the powers of the directors and any matters that should require shareholder approval.

  1. Think About What Happens When Things Go Wrong

Good corporate documents are not only written for when everyone agrees. What happens if a shareholder wants to sell their shares? What if the shareholders disagree? What if one shareholder wants to exit? What happens when a shareholder dies? What if the company reaches a deadlock?

These are not necessarily problems you expect to encounter, but they are precisely the situations where well-drafted constitutional documents become valuable.

A Practical MEMART Checklist

Before finalizing your Memorandum and Articles, ask:

Memorandum

  • Does the object clause properly reflect the company’s business and intended activities?
  • Are the shareholders and their shareholdings correctly stated?
  • Does the share structure reflect the parties’ actual agreement?
  • Are any restrictions on the company’s powers or objects intentional?
  • Is the company’s liability and capital structure correctly reflected?

Articles

  • Who controls the company and how?
  • What voting rights apply?
  • What decisions require shareholder approval?
  • How will meetings, quorum and resolutions work?
  • How will directors be appointed, removed and empowered?
  • Are there restrictions on the transfer of shares?
  • What happens if shareholders disagree or a deadlock occurs?
  • Does the company need provisions beyond the model Articles?

The objective is simple: don’t draft a MEMART just to register a company. Draft one that works for the company after registration.

Need Help Drafting Your Company’s MEMART?

We can help you draft or review your Memorandum and Articles of Association to ensure that they properly reflect your business activities, ownership structure and governance needs.

Get in touch with us to create constitutional documents that work for your business—not just documents that tick a box.

 

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