Memorandum of Association Alteration of Memorandum

Section 13 of Companies Act 2013 regulates the process of amendment in Memorandum of Association is applicable to all companies. All clauses of Memorandum except Capital clause can be altered by following the provisions of Section 13 of Companies Act, 2013 by passing special resolution.

Alteration Of Memorandum 1. Change In Name: (i) Alteration by a special resolution With the prior approval of the central government (ii) Change if name is identical : By ordinary resolution, within 3 months of directions in case the name is too identical and 6 months if identical to existing trademark. (iii) Intimate the new name within 15 days to the Registrar. (iv) Default: In case of failure to comply, a fine of Rs 1000 per day to company and Rs 5000-100000 to every officer Issue of fresh Certificate of Incorporation http://www.caclubindia.com/forum/procedure-for-change-in-object-clause-of-the-company-300394.asp#.VNRlxi58srU

2 . Change In Registered Office: (i) From the Jurisdiction of one ROC to the other within state Confirmation by the regional director Confirmation communicated within 30 days by regional director. Confirmation filed with the registrar within 60 days along with altered MOA The registrar registers it within 30 days

Example: RoCs within one state MAHARASHTRA A) Mumbai Dr. T. Pandian (ROC Mumbai) 100, Everest, Marine Drive Mumbai- 400002. Phone: 022-22812627/22020295/22846954 Fax: 022-22811977 B) Pune Sh. Vijay Kumar Khubchandani (ROC Pune) Registrar Of Companies PMT Building , Pune Stock Exchange, 3rd Floor, Deccan Gymkhana, Pune-411004 Phone: 020-25521376 Fax: 020-25530042

(ii) Change from one state to the other state Special Resolution @ general meeting Approval by the Central Government Consent of the affected parties (like creditors) Certified copy of the order to be filed with the registrar of each state Altered MOA registered within 30 days Registrar shall register within 30 days from filing of such documents (iii) Effect of Failure to Register In case of failure to comply with the provisions, the alteration becomes void and inoperative

3. Alteration of Objects: The alteration of objects is subject to (i) Substantive Limits (ii) Procedural Limits

Substantive limit: A special resolution is passed to enable the company to a) Carry business more economically and efficiently b) To attain purpose by new and improved means c) To enlarge local area of operations’ d) To carry on some business which may conveniently or advantageously be combined with the business of the company. The Object clause of MOA permitted the company to manufacture yarn and cloth but actually it was carrying on manufacture of artificial silk cloth from yarn purchased in the market . The shareholder passed a special resolution to add the production of fuel in the object clause so that company can have the power to produce yarn itself for the manufacture of silk. Is the act valid ?

A company which was formally forbidden by its AOA from paying remuneration to its Manager. Therefore the company altered its objective clause so that Company can have power to pay this remuneration to carry on the business in more efficient way . Is the alteration Valid ? A company was formed to acquire land in Egypt, wanted to alter its memorandum to take power to acquire land in Sudan. The company altered its objective clause so that Company can have power to purchase land in Sudan . Is the alteration Valid ?

a)Take approval of Directors for change in object clause of Memorandum Procedure of alteration of Object Clause Step 1 : Call BOD Meeting a)Take approval of Directors for change in object clause of Memorandum b)Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for amendment in object clause of Memorandum. c)To approve notice of EGM along with Agenda d)To authorise the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) 

Step 2 - Issue Notice of the Extra-ordinary General meeting (EGM) to all Members, Directors and the Auditors of the company    Step 3 – Holding of EGM Step 4 - Filling with ROC Company is required to file Special Resolution passed by shareholders for alteration of Memorandum with concerned Registrar of Companies. Hence, file form MGT-14 within 30 days of passing of Special Resolution with the concerned Registrar of Companies, with prescribed fees and along with following attachments:   a)Notice of EGM; b)Altered Memorandum of Association; c) Certified True copy of Board Resolution may be attached as an optional attachment.

4. Change in Liability Clause: The Liability clause cannot be changed to add to the liability unless all members agree in writing to such change

5. Change in Capital Clause: For Increase in Authorise Share Capital, the company has to make sure that its Articles of Association contain a provision authorising it to increase its authorized share capital. Section 61 of the Companies Act, 2013, mandates that Company has to make sure that its Articles of Association contain a provision authorising it to increase its authorised share capital. If there is no such provision then the company has to take steps for alteration of its Articles of Association in accordance with the provision of Section 14 of the Companies Act, 2013, to insert the clause enabling increase in the Authorised share capital of the Company.  

Procedure of alteration of Capital Clause Step 1 : Call BOD Meeting Take approval of Directors for change in object clause of Memorandum Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Ordinary Resolution, for amendment in object clause of Memorandum. To approve notice of EGM along with Agenda To authorize the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) Step 2 - Issue Notice of the Extra-ordinary General meeting (EGM) to all Members, Directors and the Auditors of the company  Step 3 – Holding of EGM

Step 4 - Filling with ROC Company is required to file Ordinary Resolution passed by shareholders for alteration of Memorandum with concerned Registrar of Companies . Hence, file form SH-7 within 30 days of passing of Ordinary Resolution with the concerned Registrar of Companies, with prescribed fees and along with following attachments:   Notice of EGM; Certified True copy of Resolution; Altered Memorandum of Association; Certified True copy of Board Resolution may be attached as an optional attachment. Step 5 . Notice to be given to Registrar for alteration of share capital. where a company alters its share capital , the company shall file a notice with the Registrar within a period of thirty days of such increase along with a copy of altered Memorandum.

Doctrine Of Ultra Vires Ultra means ‘beyond’ and Vires means ‘powers’ The purpose of these restrictions is to protect: Investors of the company Creditors of the company NOTE: An act that is ultra vires the company i.e. which is not authorized by the object clause in the memorandum, cannot be ratified even by the whole body of shareholders.

Ultra vires the Directors :- If an act or transaction is ultra vires the directors (i.e. beyond their powers, but within the powers of the company), shareholders can ratify it by a resolution in a general meeting. If any act is ultra vires the articles, it can be rectified by a special resolution at a general meeting.

Ashbury Railway Carriage & Iron Co. Ltd. vs. Riche (1875) A company was incorporated with the following objects : (i) to make, sell or lend on hire railway carriages & wagons; (ii) to carry on the business of mechanical engineers & general contractors; (iii) to purchase, lease, work & sell mines, minerals, land & buildings.

The company entered into a contract with Riche for the financing of the construction of a railway line in Belgium. It was ratified by majority of the members The company repudiated the contract. The other party brought an action for the breach of contract on the point below.

The contract came well with in the meaning of the words general contractors and it was ratified by all majority of shareholders. The Court held that the contract was ultra vires the company & void.

Effect of Ultra vires transaction Ultra vires contracts- third party cant say that they have not read the MOA. Ultra vires borrowings- lender can not recover the money. Ultra vires acquired property will be protected by company against the damage by other persons and company has a right to hold that property

A telephone company put up the wires in a certain area A telephone company put up the wires in a certain area. The company had no power to put up the wire in that area. One mischievous person cut them down. Can Company claim for damages ?

The main object of company was prevention of cruelty to animals The main object of company was prevention of cruelty to animals . It gave Rs 80000/- to political party which promised the abolition of hunting . Out of Rs 80000/- , Rs 50000 /- were given as gift and Rs 30000/- were given for publicizing of manifesto containing commitment of animal welfare. Is the act of company valid ?