This article is written by Saman Siddiqui, a student of DSNLU, Vizag. He explains in detail about the procedure to alter memorandum of association and article of association of a company.

General meaning of Memorandum of Association

The memorandum of association of company, generally called the memorandum is the document that governs the relationship between the company and the outside.

Definition according to Companies Act, 2013

Memorandum of association is one of the documents which have to file with the registrar of companies at the time of incorporation of a company. Section 2(56) defines a memorandum to mean “the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this act.” The definition, however, either does not give us any idea as to what a memorandum of association really is nor does it point out the role which it plays in the affairs of the company.

Purpose of memorandum

1. The intending share holder who contemplates the investment of his capital shall know within what field it is to be put at risk.
2. Anyone who shall deal with the company shall know without reasonable doubt whether the contractual relation into which he contemplates entering with the company is one relating to a matter within its corporate objects.

Contents of Memorandum

According to section 4, the memorandum of association of every company must contain the following clauses:

1. The name of the company with ‘limited’ as the last word of the name in the case of a public limited company and with ‘private limited’ as the last word in the case of a private limited company.
2. The state in which the registered office of the company is to be situated.
3. The objects of the company to be mentioned.
4. In the case of companies with object not confined to one state, the states to whose territories the objects extend.
5. The liability of members is limited if the company is limited by shares or by guarantee.
6. In the case of a company having a share capital, the amount of share capital with which the company proposes to be registered and its division into shares of a fixed amount.

Procedure to alter Memorandum of Association through Special Resolution & Confirmation by Central Government (Section 13)

• A Company may, by Special Resolution alter  its MOA 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; or

(b) to attain its main purpose by new or improved means; or

(c) to enlarge or change the local area of its operations; or

(d) to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the Company; or

(e) to restrict or abandon any of the objects specified in MOA; or

(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.

• The alteration of the provisions of MOA ( Memorandum Of Association ) 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.
• The application shall be filed with Central Government in Form No. INC 23 along with fee and other necessary documents.
• Before confirming the alteration, the Central Government must be satisfied-
• that sufficient notice has been given to every debenture holder & to every other person or class of persons whose interests will (in the opinion of the Central Government) be affected by the alteration; &
• that, with respect to every creditor who, in the opinion of the Central Government, is entitled to object to the alteration, & 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
• Central Government may make an order confirming the alteration on such terms & conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper.
• The certified copy of the order of the Central Government approving the Alteration of Memorandum for transfer of registered office from one state to other shall be filed in Form No. INC 28 along with fee as with the Registrar of the State within 30 days from the date of receipt of certified copy of the other.

Change of Registered Office within a State

• An application seeking confirmation from Regional Director shall be filed in Form No. INC 23 along with fee.
• 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
• Confirmation of change of Registered Office shall be communicated to the Company within 4 weeks.
• Co shall file, with Registrar of Company a certified copy of the confirmation by the Regional Director for change of its Registered Office within 2 months from the date of confirmation, together with a printed copy of MOA as altered & the Registrar of Company shall register the same & certify the registration under his hand within 1 month from the date of filing of such document.
• Alteration has to be registered within three months.

Alteration of Memorandum by Change of name

An application shall be filed in Form No. INC 24 along with fee for change in name of the company and a new certificate of incorporation in Form No. INC 25 shall be issued to the company.

Effect of failure to register

If company fails to register within the time prescribed then all such alterations made and the orders of Central Government shall become void and inoperative.

General meaning of Article of Association

The Articles of Association is a document that contains the purpose of the company as well as the duties and responsibilities of its members defined and recorded clearly. It is an important document which needs to be filed with the Registrar of Companies.

Definition according to Companies Act 2013

“Articles” means the articles of association of a company as originally framed or as altered from time to time (section 2 (5) )

Purpose of Article of Association

Articles of Association of a company governs the running of a company; setting out voting rights of shareholders, conduct of shareholders’ and directors’ meetings, powers of the management. The articles contain regulations for the internal affairs and management of the company (section 5).

Alteration of AOA by Special Resolution- Section 14

• Company by special resolution alters its article including alterations of Public Company into Private Company or vice versa, for effecting such conversion an application shall be filed in Form No. INC 27 with fee. No alteration of converting a public company into private company shall take effect unless approved by the central government.
• Alteration once approved by the Central Government, the printed copy of such approval shall be filed in Form No. INC 27 with Registrar of Company within one month of the date of receipt of the order of approval.

Click on the below mentioned links to know more on the related topics:

Companies That Should Essentially Have Articles Of Association