Commercial Correspondence and Secretarial Practice · Ch 4 — Memorandum of Association
Alteration of the Memorandum of Association
Alteration of the Memorandum of Association
A company's objects, name, capital structure, or the state where it is registered are rarely fixed forever from the moment of incorporation; businesses grow, diversify, relocate, and restructure their capital over time. The Companies Act, 2013 allows the Memorandum of Association to be altered, but — precisely because the memorandum is the company's charter, relied upon by members, creditors, and the public alike — it does not allow this to happen casually. Section 13 lays down the general framework: as a baseline rule, a company may alter the provisions of its memorandum only by passing a special resolution and otherwise complying with the requirements the section lays down, and every alteration must, once passed, be filed with the Registrar of Companies within the prescribed time, together with (where required) a printed copy of the memorandum as altered; the alteration does not take legal effect until the Registrar has registered it.
Beyond this general special-resolution requirement, several clauses carry an additional layer of procedure, reflecting how significant a change to each one can be for outside parties. The table below summarises the position a Secretarial Practice student should know.
| Clause | Additional procedure beyond a special resolution |
|---|---|
| Name Clause | Approval of the Central Government is ordinarily required (this function is delegated to the Registrar of Companies under the rules), except where the change is only the consequential addition or deletion of the word "Private" following the conversion of a private company into a public company, or vice versa |
| Registered Office Clause | Change of registered office from one State to another additionally requires the approval of the Central Government (a power delegated to the Regional Director), given the effect such a change has on the jurisdiction of the Registrar and of the courts over the company |
| Objects Clause | Where the company has raised money from the public through a prospectus and any part of that money remains unutilised, Section 13(8) requires the company, in addition to a special resolution, to give dissenting shareholders an exit opportunity in accordance with the applicable regulations, before the objects for which the money was raised can be varied |
| Liability Clause | A special resolution is required; converting an unlimited company into a limited one, or vice versa, additionally follows the specific procedure for registration of an existing company under a changed structure, since such a conversion directly affects the personal exposure of every member |
| Capital Clause | Most re-organisations of existing capital (an increase in authorised capital, consolidation, sub-division, or conversion into stock) require only an ordinary resolution under Section 61 where the Articles authorise it; an actual reduction of paid-up capital requires a special resolution and confirmation by the National Company Law Tribunal under Section 66 |
A resolution passed by a company's members with a majority of not less than three times the number of votes cast against it, as against the votes cast in favour, at a general meeting of which the required notice specifying the intention to propose the resolution as a special resolution has been duly given. Section 13 of the Companies Act, 2013 requires a special resolution as the baseline …
A protection under Section 13(8) of the Companies Act, 2013 requiring a company that has raised money from the public through a prospectus, and still holds any part of that money unutilised, to offer dissenting shareholders an opportunity to exit before the company may vary the objects for which that money was originally raised — ensuring investors who relied on the original Objects Clause are not co …