Alteration of Articles of Association of a Company

This article discusses the Alteration of Articles of Association in India. This is the most significant aspect when it comes to business perspectives. So please look into this and make it more relevant for the researchers.

Section14(1) The Companies Act, 2013, provides that a company can, subject to this Act and its conditions contained in its memorandum if any, amend its articles, including those having the effect of converting of -.

1. Private company to a public one; or

2. Public company becomes a private one.

Provision of Alteration of Articles of Association in company law

a) By adopting a new set of articles

b) By addition/insertion a new article.

c) By deleting any article.

d) By amendment of a specific rule.

Key Considerations:

• Any amendment to the Articles of a company must conform to the Companies Act 2013, and the conditions set out in the Memorandum of Association.
• The company must follow the procedures for converting a private company to a public or vice versa in order to make any changes in the AOA.
• The Company can amend the articles to include provisions for entrenchment consider to Alteration of Articles of Association. This means that specific provisions may not be changed if certain conditions or procedures are met or followed. 
• Incorporate the provisions of entrenchment only if all members of the company agree to it in the case a private company, and a special resolution in case of a publicly traded company. 

This is the procedure for the alteration of AOA pursuant to Section 14 of the Companies Act, 2013.

Step 1: Convey Board meeting of Directors: -

Not less than seven days’ notice and the agenda of the Board meeting must be sent to each director at the address registered with company. The Board Meeting will then meet to discuss the proposed amendment to Alteration of Articles of Association. Follow the procedures for issuing and signing notices of Board Meeting.

Step 2: Holding Board Meeting

• To examine and determine the Alteration of Articles of Association that need to be altered/changed.
• To approve the Board Resolution necessary to amend the articles of association of a company. This must be approved by Shareholders.
• To give authority to any director of the company to sign, certify, and file all necessary forms with Registrar of Companies, or any statutory authority, in order to affect the proposed alteration.
• To determine the day, date, time, and place for the Company's general meeting to adopt a special resolution, as required by section 14 (Companies Act), 2013.
• To approve the draft notice to general meeting and an explanation statement annexed to it.
• To authorize the Director or Company Secretary sign and to issue notice of the general assembly.

Step 3: Issue Notice of General meeting

Within 15 days of the end of the Board Meeting, prepare and circulate draft minutes by hand/speed mail/registered postal/courier/email to all Directors for any comments. Follow the procedures for creating, circulating, signing, and compiling Board Minutes. Notify all shareholders, directors, auditors, and other persons entitled by it to the General Meeting by providing not less than 21 days’ notice. If consent is given by 95% or more of those members who are entitled to vote at such meeting, the notice can be sent electronically or in writing. Follow the procedures for convening and issuing notice.

Step 4: Hold General meeting

Hold a shareholders meeting at the time and date set. Pass the Special Resolution to amend the Alteration of Articles of Association with 3/4th majority or unanimously in the case of inserting provisions for entrenchment by private companies.

Step 5: Filing of form with ROC

You must file a certified copy with the Registrar in E-Form No. MGT-14 after passing special resolution within 30 days after passing Special Resolution in General Meeting along with given documents:

a. Certified true Copies of the Special Resolution along with Explanatory Statement;

b. Copy of Notice to convene the General Meeting of Company along with annexure;

c. Printed copy of Altered Articles of Association, including any provisions for entrenchment.

d. Consent letters from members for shorter notices in the event that the General Meeting is called off.

e Any other attachment that may be applicable.

Note:

1. Private companies may alter their articles to remove the limitations and restrictions required by this Act. The company ceases to be a public company as of the date of the alteration. 

2. Any modification that has the effect of converting a public company to a private corporation shall be approved by the Tribunal

3. The company must file an application in Form No.INC.27 to convert a private company into one that is public or vice versa. Also see Procedure for converting a public company into a private limited company or vice versa.

Write a detailed note on procedure for alteration of memorandum and articles of association?

Follow these steps of Alteration of Articles of Association are:

Step 1: Board meeting - Issue Notice of Board Meeting to all the directors of company at least 7 days before the date of Board Meeting.

Attach Agenda and Notes to Agenda

Draft Resolution with the notice

Step 2: Shareholders meeting: Check the Quorum of members.

Check whether auditor of the company is present or not.

Pass Special Resolution.

Approval of Alteration in MOA

Step 3: Submission of MGT-14:

File e-form MGT-14 within 30 days of passing the special resolution, along with given documents-

a. Certified true Copies of the Special Resolution along with Explanatory Statement;

b. Copy of Notice to convene the General Meeting of Company along with annexure;

c. Printed copy of Altered Articles of Association, including any provisions for entrenchment.

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