One of the first steps in the formation of a business is the preparation of a document called the memorandum of association (hereinafter referred to as MoA). The company's MoA contains the basic conditions under which the company alone has been incorporated. The term "alter" means to modify/change or vary; in some way to make or become different.
As per Section 2(3) of the Companies Act, 2013 (the Act), the making of additions, omissions, and substitutions shall include "alteration" and "alteration."
Instances in which a company would have to alter its articles are when, there is a change of name, alteration of authorized capital, change in its objects, and shift of its registered office.
A company wishing to change its name may do so by passing a Special Resolution and a name approved by the Ministry of Corporate Affairs (MCA) on the prescribed application following the provisions of Section 13 read in Section 4 of the Act. The central government's power to approve a change of name under Section 13(2) has been delegated to the Registrar of Companies (ROC). However, if the required change is the addition or deletion thereof of the word 'private' resulting from the conversion of a public company into a private company or vice versa, no such approval is required by the central government.
The Authorized Capital must be checked by a company seeking to issue shares through Private Placement or Rights Issue or any other prescribed methods, as the issue can not exceed the amount of Authorized Capital. Therefore, in the light of the foregoing, a company may modify its Authorized Capital, i.e. Under Section 13, the Capital Clause reads by passing an Ordinary Resolution with Section 61. By the prescribed procedure, the Capital Clause will be modified by the applicable rules and the payment of the relevant stamp duty as applicable and levied by the State in which the registered office of the Company is located.
A company may, in accordance with the provisions of Section 13 of the Act, alter its objects as enshrined in its MOA. Any alteration of the MOA with respect to the company's objects is therefore permitted by Special Resolution. However, Section 13(8) limits the change in the object of a company that, through a prospectus, has raised money from the public and still has any unused amount of the money so raised, unless a special resolution is passed by the company and the details of that resolution are published in one vernacular language and one English-language newspaper circulating at the registered office location.
Each company shall, as provided for in Section 12 of the Act, have a registered office at all times to which all communications and notices may be addressed. Each company shall submit verification of its registered office in INC-22, prescribed under Companies (Incorporation) Rules, 2014, within 30 days of its incorporation or any change in the address of its registered office.
The alteration of the Association Memorandum is an important exercise through which the company provides the necessary flexibility that is relevant to its existence as an entity and its survival. It is a precondition before any drastic change in its 'form or structure' can be initiated by the company. As is now evident from the above discussion, it is clear that any act of the organization must be within the limits set by the Memorandum of Association.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.
