In the previous article Memorandum and Article of Association of Company & related doctrines we discussed memorandum and article of association, now it’s time to discuss how to alter it. Let’s have a look at alteration of each clause of memorandum:
Name Clause: Name of Company can be changed either voluntarily or at the direction given by the central government. If name is changed voluntarily, conduct a board meeting and pass board resolution to decide that name should be changed and to authorise any officer to get approval of proposed name. Application for reservation of new name to be made to Registrar of Companies in Form RUN (Reserve Unique Name) which will be available for 60 days after approval. Conduct another board meeting to pass Board Resolution for calling the General Meeting to pass a special resolution of members. Notice and explanatory statement should be sent to members of the company. File certified true copy of resolution in MGT-14 to ROC.
File application for approval of Regional Director (RD) in Form No. INC-24 within 30 days of passing a special resolution. However, for adding or deleting word private i.e., conversion from private limited to public limited and vice versa,, approval of RD is not required. After the approval of RD, apply to ROC for a new Certificate of Incorporation in Form No. INC 25.
In case of compulsory change of name i.e., on the order of government, all processes are the same as voluntary change but the approval of RD is not required.
Situation Clause: As discussed earlier, only the state in which the registered office of the company is situated is mentioned in this clause so if a company changes its office within a city or state, the memorandum of association is not altered. But if changing city causes change in Registrar of Companies (ROC), then alteration in memorandum is required as ROC under whose jurisdiction the company is incorporated is also mentioned. However, there are only two states where two ROCs are there i.e., Maharashtra and Tamil Nadu.
If a company changes its Registered office within the city then only Board Resolution is required. If a company changes its Registered office within state and it does not cause change in ROC then special resolution is required. File INC-22 with certified true copy of special resolution, certified true copy of Board Resolution and fees to ROC.
If change in the city causes change in ROC than with special resolution, approval of the Regional Director is required. Company shall apply in INC-23 for approval of RD who will direct the company to make public advertisement in English, Hindi and vernacular (regional) newspaper stating the date of hearing. Any person interested in the company having objection may file it to the RD on the date of hearing. After hearing all the parties, RD may approve or reject the application. If approved, the company shall file the approval, certified true copy of special resolution and board resolution and other documents if any to existing ROC who will mention it in its records and forward it to new ROC and company shall file INC-22 to new ROC.
If there is change in state, the process is the same as stated above just in addition to that new ROC will issue New Certificate of Incorporation as it will cause change in Corporate Identification Number (CIN).
Object Clause: To change object clause, pass Board Resolution and Special Resolution. But if the company has raised money from public through prospectus and has any unutilized amount out of the money so raised it has to give public advertisement stating how much money is raised, how much is unutilized, reason of alteration, its impact etc. and also include it in explanatory statement to be send with notice of general meeting.
Capital Clause: It can be altered by increasing authorised share capital, consolidating shares into larger denomination, subdividing shares into smaller denomination, converting fully paid up shares into stock and vice versa or cancelling unsubscribed share capital. To alter it, pass board resolution and special resolution & file it with ROC in MGT-14 within 30 days. File Form SH-7 with ROC within 30 days from date of alteration. However, to reduce the liability on any of its shares in respect of the share capital not paid, cancelling any paid-up share capital which is lost or is unrepresented by available assets or paying off any paid-up share capital which is in excess of the wants of the company, confirmation from National Company Law Tribunal (NCLT) is also required.
Liability Clause: To change liability of members from limited to unlimited, written consent of all members is required.
To change liability of members from unlimited to limited, Pass Board Resolution and Special Resolution. Make public Advertisement in English and Hindi Newspaper and intimate it to creditors of the company. Any person interested in the company can file its objection with the company and ROC within 21 days from the date of advertisement. Within 45 days of passing the special resolution, the company shall file with the ROC certified true copy of Board Resolution and special resolution, declaration from at least 2 directors and declaration from auditor about the solvency of the company. But if the net worth of the company is negative, any inquiry, investigation or application of liquidation or strike off is pending, it has not received call in arrears from its directors for 6 months from due date or the company is in default of filing annual returns. And after conversion the company cannot change its name for 1 year and cannot distribute dividend until debt before conversion is paid back.
To change the liability of members from limited by guarantee to limited by share capital, pass board resolution and special resolution and file it to ROC in form no. MGT-14 within 30 days. Also, each member has to contribute an amount equal to the amount of guarantee undertaken by them.
Alteration of Articles of Association
To alter AOA, pass board resolution and special resolution. File certified true copy of special and board resolution and altered AOA with ROC within 30 days. If it involves conversion from private company to public company, approval of Regional Director is also required.
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