Q.Discuss the limitations on a company's power to alter its Articles of Association under the Companies Act, 2013.
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Start your 14-day free trial to unlock the full solution →Section 14(1) of the Companies Act, 2013 grants a company the power to alter its Articles by special resolution, but this power operates within clearly defined boundaries, and an alteration that steps outside them is invalid however properly the special resolution itself was passed.
First, an alteration cannot conflict with, or go beyond, the provisions of the Companies Act, 2013 — the Articles remain at all times subordinate to the Act's own mandatory requirements. Second, and consistently with the general hierarchy of a company's charter documents, an alteration cannot conflict with the conditions contained in the company's own Memorandum of Association; the Articles can never override what the Memorandum itself provides. Third, an alteration cannot be made contrary to, or inconsistent with, an order of a Tribunal or a Court — where a Tribunal has, for instance, directed a specific Articles provision as part of relief in an oppression-and-mismanagement matter, the company cannot simply alter that provision away by ordinary special resolution. Fourth, an alteration cannot authorise the company to do anything illegal or contrary to public policy. …
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