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Buying And Living in a Multi-Unit Development Property in Ireland

9. Management Company Formation

Continued

9.6 Memorandum and Articles of Association

These are two documents which companies are required to draft under company law.

The main purpose of the memorandum of association is to set out the name and objectives of the company, i.e. the reason for which the company has been established.

The Articles of Association are essentially the rules setting out how the company will be governed.

These documents are very important as they set out the management company's rules and procedures also outline what rights members will have in terms of having a say in how the company is run.

The Memorandum and Articles of Association will state who the directors of the company are (i.e. who is responsible for running the company) and what voting rights you, as a member will have.

9.6.1 Drafting a Memorandum and Articles of Association

The company's main activity must be stated in the Memorandum and Articles of Association.

While the Companies Acts set out a standard set of Articles, a company can amend these articles or, alternately, draw up its own.

Companies can therefore draft their rules to suit their own purposes provided that the rules are not in conflict with company law.

The standard form of articles for private companies set out the role and rules governing:

  • Directors;
  • Company secretary;
  • Meetings;
  • Votes of members.

Amongst the important areas which management companies are free to draft according to their own terms are:

  • The procedures and frequency that members and directors' meetings will be held;
  • The voting power of members and directors respectively and
  • The extent to which members will be permitted to inspect the accounting and other records of the company.

9.6.2 Changing the Articles of Association

The members of a company can alter the terms of the articles of association at a meeting of the company provided that 75% of the members who are entitled to vote agree on the proposed changes.

9.6.3 Can I see the management company's Articles of Association before I buy a unit?

All companies must lodge their Memorandum and Articles of Association with the CRO and you can request a copy from the CRO.

Because of the flexibility management companies have with regard to drafting their operating rules, it is important that your solicitor obtains a copy of, and examines, the wording in the Memorandum and Articles of Association of the management company to ensure that the terms are acceptable to you as an owner/member.

9.7 The Register of Members

When you become a member, your contact details must be taken for the register of members.

This register sets out information such as your name/ addresses and the date on which you became a member.

The register of members is important as it is used to notify members of meetings of the management company and also to identify all persons who must pay service charges.

The register sets out the following information:

  • Members' names and addresses;
  • Number of shares held by each member (in the case of companies having a share capital);
  • The date on which each person was entered in the register;
  • The date on which each person ceased to be a member of the company.

The register is generally kept at the company's registered office and must be open to inspection to every member free of charge.

It must also be submitted to the CRO where the public may access it.

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