If Nick is insisting not to offer his shares to other members first, it is a strict violation of the Articles of Association which states that a shareholder must offer his shares to another member who will agree to pay a fair price, and if the shareholder do not offer to purchase his shares, then he may consult an external buyer to sell his shares. Here it must be noted that the valuation being arrived by different buyers will in fact be different and this will be dependent on the company’s performance, which unfortunately is not exciting. Since all the contents and objects including restrictions mentioned in the memorandum has been deemed transferred to the Articles of Association, following and adhering to the Articles restrictions is the foremost priority of the directors and shareholders. Thus, it is seen that Nick cannot sell shares to an outsider unless he negotiates with an internal shareholder who is ready to pay a fair price for the same.
Since the introduction of the Companies Act 2006, there is no need for companies to have a separate Memorandum of Association, because for all existing companies that has been incorporated before 2006 the contents of the memorandum are deemed to be transferred to the Articles of Association. This is because some of the contents and objects were creating self-imposed restrictions on the company. Now the Articles is considered the pre-dominant document containing the internal and external affairs of the company that are to be followed, therefore the Articles has become the foremost requirement and the main document of any company (Lawteacher.net, 2014). Thus, the memorandum has been rendered redundant by the 2006 Act and since then the Articles has been given primary importance and the memorandum has been of historical significance.