Memorandum of association
In one sentenceThe document signed by the partners when founding the company, setting out its name, activity, capital, partners' shares, how it is managed, and how its profits are distributed.
Simply put
It is the first reference in any dispute between partners or question about powers: who signs, how the manager is appointed, how profits are divided, and what happens when a partner leaves.
For the accountant: read it before preparing the financial statements, because it may require reserves to be set aside from profits or rules for distribution. Any amendment to it must be documented and updated in the commercial registration.
Example
A limited liability company's memorandum of association states that profits are distributed in proportion to shares after setting aside part of them as a reserve. At closing, the accountant calculates the reserve first, then distributes the rest according to the memorandum.
Don't confuse it with
BylawsThe bylaws are the document of a joint stock company and are more detailed on governance, while the memorandum of association is usually used in limited liability companies and partnerships.