Alteration of Memorandum of Association

Prepared By: Name: Ram Punjani Roll No: 30

Alteration of Memorandum of Association

Alteration of memorandum of association involves compliance with prescribed procedure. Alterations only to the extent necessary for simple and fair working of the company would be permitted. Alterations should not be prejudicial to the members or creditors of the company and should not have the effect of increasing the liability of the members and the creditors. Contents of the memorandum of association can be altered as under:

Change in the registered office and objects of the company: (According to Section 17 of Companies Act, 1956)
(1) A company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with respect to the objects of the company so far as may be required to enable it (a) to carry on its business more economically or more efficiently; (b) to attain its main purpose by new or improved means; (c) to enlarge or change the local area of its operations; (d) to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company; (e) to restrict or abandon any of the objects specified in the memorandum; (f) to sell or dispose of the whole, or any part, of the undertaking, or of any of the undertakings, of the company; or (g) to amalgamate with any other company or body of persons. (2) The alteration of the provisions of memorandum relating to the change of the place of its registered office from one State to another shall not take effect unless it is confirmed by the Central Government on petition. (3) Before confirming the alteration, the Central Government must be satisfied (a) that sufficient notice has been given to every holder of the debentures of the company, and to every other person or class of persons whose interests will, in the opinion of the Central Government be affected by the alteration; and (b) that, with respect to every creditor who, in the opinion of the Central Government, is entitled to object to the alteration, and who signifies his objection in the manner directed by the Central Government, either his consent to the alteration has been obtained or his debt or claim has been discharged or has been determined, or has been secured:

(4) The Central Government shall cause notice of the petition for confirmation of the alteration to be served on the Registrar who shall also be given a reasonable opportunity of appearing before the Central Government and state his objections and suggestions, if any, with respect to the confirmation of the alteration. (5) The Central Government may make an order confirming the alteration on such terms and conditions, if any, as it thinks fit and may make such order as to costs as it thinks proper. (6) The Central Government shall, in exercising its powers under this section, have regard to the rights and interests of the members of the company and of every class of them, as well as to the rights and interests of the creditors of the company and of every class of them. (7) The Central Government may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Central Government for the purchase of the interests of dissentient members; and may give such directions and make such orders as it thinks fit for facilitating or carrying into effect, any such arrangement.

Change of registered office within a State (According to Section 17(A) of the Companies Act, 1956)
(1) No company shall change the place of its registered office from one place to another within a State unless such change is confirmed by the Regional Director. (2) The company shall make an application in the prescribed form to the Regional Director for confirmation under sub-section (1). (3) The confirmation referred to in sub-section (1), shall be communicated to the company within four weeks from the date of receipt of application for such change. Explanation.For the purpose of this section, it is hereby declared that the provisions of this section shall apply only to the companies which change the registered office from the jurisdiction of one Registrar of Companies to the jurisdiction of another Registrar of Companies within the same State. (4) The company shall file, with the Registrar a certified copy of the confirmation by the Regional Director for change of its registered office under this section, within two months from the date of confirmation, together with a printed copy of the memorandum as altered and the Registrar shall register the same and certify the registration under his hand within one month from the date of filing of such

document. (5) The certificate shall be conclusive evidence that all the requirements of this Act with respect to the alteration and confirmation have been complied with and henceforth the memorandum as altered shall be the memorandum of the company.]

Alternation to be registered within three months (Section 18 of the Companies Act, 1956)
(1) A company shall file with the Registrar (a) a special resolution passed by a company in relation to clauses (a) to (g) of subsection (1) of section 17, within one month from the date of such resolution; or (b) a certified copy of the order of the Central Government made under sub-section (5) of that section confirming the alterations, within three months from the date of order, as the case may be, together with a printed copy of the memorandum as altered and the Registrar shall register the same and certify the registration under his hand within one month from the date of filing such documents. (2) The certificate shall be conclusive evidence that all the requirements of this Act with respect to the alteration and the confirmation thereof have been complied with, and thenceforth the memorandum as so altered shall be the memorandum of the company. (3) Where the alteration involves a transfer of the registered office from one State to another, a certified copy of the order confirming the alteration shall be filed by the company with the Registrar of each of the States, and the Registrar of each such State shall register the same, and shall certify under his hand the registration thereof; and the Registrar of the State from which such office is transferred shall send to the Registrar of the other State all documents relating to the company registered, recorded or filed in his office.

Extension of time limit

(4) The Central Government] may, at any time, by order extend the time for the filing of documents or for the registration of the alteration under this section by such period as it thinks proper

Effect of failure to register (According to Section 19 of the Companies Act, 1956)

(1) No such alteration as is referred to in section 17 shall have any effect until it has been duly registered in accordance with the provisions of section 18. (2) If the documents, required to be filed with the Registrar under section 18 are not filed within the time allowed under that section, such alteration and the order of the Central Government made under sub-section (5) of section 17 and all proceedings connected therewith shall, at the expiry of such period, become void and inoperative

Change of name clause:

According to section 21 of Companies Act, 1956 The company can effect the change in the name of the company by passing a special resolution in a General Meeting of the members of the company and after obtaining Central Government approval. No approval of Central Government is necessary where the only change in the name of the company is addition or deletion of the word Private because of conversion of a public company into a private company or vice versa.

Rectification of name of company (Section 22 of Companies Act,1956)

(1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, in the opinion of the Central Government, is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, whether under this Act or any previous companies law, the first mentioned company (a) may by ordinary resolution and with the previous approval of the Central Government signified in writing, change its name or new name; and (b) shall, if the Central Government so, directs within twelve months of its first registration or registration by its new name, as the case may be, or within twelve months of the commencement of this Act, whichever is later, by ordinary resolution and with the previous approval of the Central Government signified in writing, change its name or new name within a period of three months from the date of the direction or such longer period as the Central Government may think fit to allow. (2) If a company makes default in complying with any direction given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable

with fine which may extend to one hundred rupees for every day during which the default continues.

Registration of change of name and effect thereof (According to Section 23 of Companies Act,1956)
An application is to be made to the Registrar of Companies for availability of new name. (1)Where a company changes its name in pursuance of section 21 or 22, the Registrar shall enter the new name on the Register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein; and the change of name shall be complete and effective only on the issue of such a certificate. (2)The Registrar shall also make the necessary alteration in the memorandum of association of the company.

Effect of change of name

The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name The alteration effected is only in the name and not in the identity of the company. The change of name does not affect the entity of the company or its continuity as the same entity with the same rights privileges and liabilities as before. A change of name does not bring into existence a new company. Nothing authorizes the company to commence a legal proceeding in its former name at a time when it had acquired its new name.

Change of existing private limited companies (According to Section 24 of Companies Act, 1956)
In the case of a company which was a private limited company immediately before the commencement of the Act, the Registrar shall enter the word 'Private' before the word 'Limited' in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association. The effect of the change of the name shall remain the same as mentioned above.

Change in the name of Government Companies

In case of the government companies, the registration procedure and effect remains the same as mentioned in Section 23 of Companies Act, 1956. Moreover, where the change in the name of a Government Company consists only in the deletion of the word Private therefrom, that Government Company shall, not later than three months from the date there of, inform the Registrar of the aforesaid change and thereupon the Registrar shall delete the word Private before the word Limited in the name of the Company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company.

Power to dispense with "Limited" in name of charitable or other company (Section 25 of the Companies Act, 1956)
(1) Where it is proved to the satisfaction of the Central Government that an association (a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and (b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Central Government may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word " Limited" or the words "Private Limited". (2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be subject to all the obligations, of limited companies. (3) Where it is proved to the satisfaction of the Central Government (a) that the objects of a company registered under this Act as a limited company are restricted to those specified in clause (a) of sub-section (1); and (b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members, the Central Government may, by licence, authorise the company by a special resolution to change its name, including or consisting of the omission of the word "Limited" or the words "Private Limited"; and section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21. (4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the firm, its membership of the association or company shall cease. (5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations shall be binding on the body to which the licence is granted, and where the grant is under sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other. (6) It shall not be necessary for a body to which a licence is so granted to use the word "Limited" or the words "Private Limited" as any part of its name and, unless its articles

otherwise provide, such body shall, if the Central Government by general or special order so directs and to the extent specified in the direction, be exempt from such of the provisions of this Act as may be specified therein.

Revocation of license by Central Government

(7) The licence may at any time be revoked by the Central Government, and upon revocation, the Registrar shall enter the word "Limited" or the words "Private Limited" at the end of the name upon the register of the body to which it was granted; and the body shall cease to enjoy the exemption granted by this section: Provided that, before a licence is so revoked, the Central Government shall give notice in writing of its intention to the body, and shall afford it an opportunity of being heard in opposition to the revocation. (8) (a) A body in respect of which a licence under this section is in force shall not alter the provisions of its memorandum with respect to its objects except with the previous approval of the Central Government signified in writing. (b) The Central Government may revoke the licence of such a body if it contravenes the provisions of clause (a). (c) In according the approval referred to in clause (a), the Central Government may vary the licence by making it subject to such conditions and regulations as that Government thinks fit, in lieu of, or in addition to, the conditions and regulations, if any, to which the licence was formerly subject. (d) Where the alteration proposed in the provisions of the memorandum of a body under this sub-section is with respect to the objects of the body so far as may be required to enable it to do any of the things specified in clauses (a) to (g) of subsection (1) of section 17, the provisions of this sub-section shall be in addition to, and not in derogation of, the provisions of that section.] (9) Upon the revocation of a licence granted under this section to a body the name of which contains the words "Chamber of Commerce", that body shall, within a period of three months from the date of revocation or such longer period as the Central Government may think fit to allow, change its name to a name which does not contain those words; and (a) the notice to be given under the proviso to sub-section (7) to that body shall include a statement of the effect of the foregoing provisions of this sub-section; and (b) section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.

In case of default in compliance

(10) If the body makes default in complying with the requirements of sub-section (9),it shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues

 Change of Liability clause

Ordinarily liability clause cannot be altered so as to make the liability of members unlimited.any alteration in memorandum will be void if the effect of the alteration is the enhancement of the liability of members. It doesnot apply to a case where the members agree in writing to be bound by the alteration. Section 32 permits an unlimited company to register as a limited company.

Change of capital clause

A limited company may alter by passing a special resolution in the general meeting.the confirmation of the court is not required if the alteration is made for any of the following purposes: To increase its share capital To consolidate and divide its capital into shares of larger amount. To convert its fully paid shares into stock and reconvert the stock into fully paid shares. To sub-divide its shares into shares of smaller amount. To cancel its shares which are not issued.

References
http://www.vakilno1.com/bareacts/companiesact/companiesacts.htm http://www.citeman.com/12490-alteration-of-memorandum-of-association.html http://www.netlawman.co.in/acts/companies-act-1956.php