Alteration of Memorandum of Association

Alteration of Memorandum of Association

Alteration of Memorandum of Association

A company’s memorandum of association, often simply called the “Memorandum”, is the document that governs relations between the company and the outside world. It serves as the constitution of the company.

According to the Companies Act., section 12(1), if there is urgent need of any change or rectification of any clauses of the Memorandum of Association; those will be done by the decision of the members in the special meeting. Because any change in various clauses of memorandum may have an adverse effect on any of the parties connected with the company. In this regard, Company Law has prescribed a particular procedure for making a change in the memorandum, which varies from clauses. Here describing the procedure followed for carrying out a change in the memorandum:

Alteration of name clause: A company may change its name by passing a special resolution and with the pray approval of the government. The government can also direct the company within 12 months of its registration to change its name and this will have to be done within three months. The change of the company name is to be done by the special decision of shareholders’ meeting and also to the permission of the court [Section, 11 (6)]. But the copy of the court order and the letter of the meeting’s decision have to be submitted to the registrar. After getting those documents the registrar will go to issue a new registration letter on the basis of the ‘New Name’ of the company [Section. 11 (7)].

Alteration of situation clause: the Alteration of the situation clause is to be done by the special decision and the court order [section. 12(1)]. The change in registered office place from one state to another requires a change in memorandum also. Later, it is needed to inform the registrar by written form. The reasons behind the change of situation clause are placed below,

(a) To achieve more frugality.

(b) To enhance the efficiency of management.

(c) To earn more profits etc.

It has to send a notice to the registrar regarding any change of the situation clause of the registered office of the company within 28 days, [Section, 77(2)].

Alteration of an objective clause: The object clause can be changed by passing a special resolution and by getting the permission of the company law board. A copy of the resolution should be sent to the registrar within 30 days of passing the resolution. A petition is also made to the company law board for issuing a confirmation. The change is necessary to allow the company to carry on as the business more economically or effectively. There are some provisions for getting the court’s permission as placed below:

(a) It will have to inform each creditor and person interference with the change.

(b) It will have to repay all the amount of the anti-change creditors.

(c) Courts will hear the opinion of the registrar. It has to submit the letter of court’s permission and the changed or altered memorandum to the registrar.

Alteration of capital clause: A change in capital clause involving an increase in the authorized capital can be affected by passing an ordinary resolution in the general meeting whether there is an option to alter the portion of capital in the Articles of Association or not, then it is needed to get the permission of court regarding change or alteration of capital. According to the Companies Act, Section 53 (2, 3), it is said that companies have to enforce their power of change only by their general meeting and the decision about the alteration of change of capital is to inform the registrar within lice days.

Alteration of liability clause: According to the Companies Act, 1994 Section 76 (1) “Any company, holding limited liability, has to bring any change in the Articles of Association by special decision for the purpose of converting the limited liability of its all or a few number of directors into the unlimited liability”.

From above discussion, we can say that any type of alteration of the Memorandum of Association is prior to fulfilling some provisions and conditions. These provisions are to be followed properly if any change is to be done.