Procedure for alteration of Conditions in Memorandum of Association

Alteration of the Conditions of Memorandum of Association

The condition or the obligatory clauses of the Memorandum of Association can be altered in the manner stated below.

Procedure for alteration of Conditions in Memorandum of Association

Procedure for alteration of Conditions in Memorandum of Association

1. Alteration of the Name Clause in MoA

The procedure to be followed in regard to the change of the name under different circumstances is as follows.

1. General Change of the Name

The name of the company can be altered at any time. For the purpose, a special resolution has to be passed and a written approval of the Central Government is to be obtained. A copy of the special resolution should be filed with the Registrar within 30 days of its passing.

2. Change of Name under the Direction of the Central Government

If by mistake or otherwise a company has been registered by a name, which the Central Government thinks, is identical with or closely resembles the name of an existing company, the Government may direct the company to change its name. The direction of the Central Government is required to be complied with, within a period of 3 months from the date thereof.

Any default in complying with the direction by the Government, render the company and its officers in default liable for punishment with fine which may extend to Rs.1,000 for every day during which the default continues. The following procedure should be followed.

  1. The company should pass an ordinary resolution.
  2. The company should get the written approval of the Central Government.
  3. A copy of the ordinary resolution has to be filed with the Registrar within 30 days of its date.

3. Addition or Deletion

On conversion of a private limited company into a public limited company and vice versa, the addition or deletion of the word ‘Private’ is to be made. It requires no Government’s approval.

4. Minor Mistakes

A minor mistakes like spelling mistakes etc. may be altered by an ordinary resolution.

2. Alteration of the Situation Clause of MoA

The procedure for altering the situation clause can be studied under the following heads:

1. Change of Registered Office in the same Town or Village

A mere resolution of the Board of Directors is enough for the change. A notice of the change should be filed with the Registrar within 30 days of the change. This does not involve alteration of Memorandum

2. Change of Registered Office from one Place to another within a State

A company can change the place of its registered office from one place to another within a State, if the Regional Director confirms it. For this purpose, the company has to make an application to the Regional Director for confirmation. This confirmation shall be communicated to the company within four weeks. The company shall then file with the Registrar a certified copy of the confirmation by the Regional Director, within 2 months from the date of confirmation, together with a printed copy of the Memorandum of Association as altered. The Registrar shall register the same within one month from the date of filing of such document.

3. Change of Registered Office from one State to Another

The change of registered office from one state to another state involves alteration of Memorandum, and the change can be effected by a special resolution of the company which must be confirmed by the Central Government.

The following procedure should be followed for the purpose:

  1. A special resolution must be passed.
  2. A copy of the special resolution should be filed with the Registrar within one month of its passing.
  3. The alteration is to be confirmed by the Central Government.
  4. A certified copy of the Central Government’s order and a copy of the altered Memorandum should be filed with the Registrar within 3 months.

3. Alteration of the Objects Clause of MoA

The company can make a change in the objects clause only by the following procedure:

1. A special resolution should be passed.

2. The alteration must be confirmed by the Central Government. The Central Government will confirm the alteration if the Registrar, creditors, members and others interested in the company do not object it.

3. The Central Government will confirm the alteration if it is made for any one of the following purposes:

  1. To carry on its business more economically and efficiently.
  2. To attain its main purpose by new or improved means.
  3. To enlarge or change the local area of its operations.
  4. To carry on some business which under existing circumstance may conveniently or advantageously be combined with the business of the company.
  5. To restrict or abandon any of the objects specified in the Memorandum.
  6. To sell or dispose of the whole or any part of the undertaking.
  7. To amalgamate with any other company or body-corporate.

4. A certified copy of the order of the Central Government must be filed with the Registrar within 3 months from the date of the order.

4. Alteration of the Liability Clause of MoA

The liability clause cannot be altered to make the liability of the members unlimited. But if all the members agree, and if the Articles permit, the liability of all the directors or any of the directors can be altered. A special resolution must be passed for this purpose.

In such case, however, the liability of the person holding office as Director or Manager before such alteration shall not be made unlimited until the expiry of his present term. His liability for the unexpired period of the present term can be made unlimited only if he gives his consent to his liability becoming unlimited. Therefore, alterations resulting in additional liability on a member cannot be made except with the written consent of the member concerned.

5. Alteration of the Capital Clause of MoA

The capital clause of a company can be altered for any one of the following purposes:

1. Alteration Proper

If the Articles of Association permits, a company can make an alteration under this head by passing an ordinary resolution. By this alteration, the company can-

  1. Increase its share capital by new issue.
  2. Consolidate or sub-divide all or any of its share capital.
  3. Convert the fully paid up shares into stock or reconvert stock into shares.
  4. Cancel the unissued shares and to that extent diminish the amount of its share capital.

2. Reduction of Capital

For purpose of a reduction of the share capital, the following conditions are to be fulfilled.

  1. Authorization of the Articles of Association is necessary.
  2. The company should pass a special resolution.
  3. The company has to get confirmation from the National Company Law Tribunal.
  4. A copy of the resolution and the order of the National Company Law Tribunal should be filed with the Registrar.

Share capital of a company can be reduced by –

  1. reducing or extinguishing the liability of members on unpaid capital,
  2. writing off the paid-up capital which is not represented by the assets,
  3. returning the surplus of the paid-up capital.

3. Increase in Share Capital

A limited company having a share capital can increase its share capital by such amount as it thinks expedient subject to the satisfaction of the following conditions:

1. The Articles of the company should contain powers authorizing the company to increase its capital.

2. The company must pass a resolution in a general meeting.

3. A notice of increase in capital is required to be filed by the company with the Registrar within 30 days after the passing of the resolution and the Registrar shall thereupon record the increase and also make any alterations which may be necessary in the company’s Article or Memorandum or both.

4. The notice to be given to the Registrar should include particulars of the class of shares affected and the conditions, if any, subject to which the new shares have been or are to be issued.

4. Variation of Shareholders’ Rights

The rights of a class of shareholders mentioned in the Memorandum may be altered by means of a resolution passed by 3/4 of the shareholders of that class or by a special resolution at their class meeting. However, such variation can be made only if provision with respect to such variation is contained in the memorandum or articles of the company. In the absence of any such provision in the memorandum or articles, variation can be made only if such variation is not prohibited by the terms of issue of the shares of that class.

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