ALTERATION OF ARTICLES OF ASSOCIATION COMPANIES ACT 2013

• COMPANY LAW 2013
• ALTERATION OF ARTICLES
• ALTERATION OF AOA SECTION 14

1. A COMPANY HAS STATUTORY RIGHT TO ALTER ITS ARTICLES OF ASSOCIATION
2. ANY REGULATION DEPRIVING THIS RIGHT IS INVALID
3. FOR EXAMPLE A PROVISIONS IN THE ARTICLES THAT NO ALTERATION OF THE ARTICLE WITHOUT THE CONSENT OF THE A IS CONTRARY TO THE PROVISIONS OF THE COMPANIES ACT AND INVALID
4. A CO CAN NOT REPLACE ITS ARTICLES, ONLY THE REGULATIONS CONTAINED IN THE ARTICLES
5. COMPANY CAN ALTER ITS ARTICLES BY WAY OF ADDITION,DELETION,MODIFICATION,SUBSTITUTION OR IN ANY OTHER WAY ONLY IF WANTS

• ALTERATION

1.     BY PASSING SPECIAL RESOLUTION

2.     A COPY OF SPECIAL RESOLUTION HAS TO BE FILED WITH IN THIRTY DAYS TO ROC

3.     EVERY ALTERATION MADE IN MOA OR AOA SHALL BE NOTED IN EVERY COPY OF MOA OR AOA

4.     DEFAULT IN COMPLYING WITH THE PROVISIONS COMPANY AND EVERY OFFICER IN DEFAULT WILL BE LIABLE TO A PENALTY OF 1000 RUPEES FOR EVERY COPY OF MOA OR AOA ISSUED WITHOUT SUCH ALTERATION

5.     THE ALTERED ARTICLES WILL BIND THE MEMBERS IN THE SAME WAY AS THE ORIGINAL ARTICLES.

• ALTERATION OF AOA SECTION 14
• SUBJECT TO THE PROVISIONS OF THIS ACT AND CONDITIONS CONTAINED IN ITS MEMORANDUM,IF ANY COMPANY MAY BY PASSING A SPECIAL RESOLUTION ALTER ITS ARTICLES INCLUDING ALTERATIONS HAVING THE EFFECT OF CONVERSION OF :

1. A PRIVATE COMPANY INTO A PUBLIC COMPANY OR
2. A PUBLIC COMPANY INTO A PRIVATE COMPANY

·         WHEN A COMPANY PRIVATE COMPANY ALTERS ITS ARTICLES THAT THEY NO LONGER INCLUDE THE  RESTRICTIONS AND LIMITATIONS AND THE COMPANY CEASES TO PRIVATE COMPANY

·         ANY ALTERATION HAVING THE EFFECT OF CONVERSION OF PUBLIC COMPANY INTO A PRIVATE COMPANY SHALL NOT TAKE EFFECT EXCEPT WITH THE APPROVAL OF TRIBUNAL WHICH SHALL MAKE SUCH ORDER AS IT MAY DEEM FIT.

• PROCEDURE TO ALTER THE AOA

1. CONVEY BOARD MEETING OF DIRECTORS AS PER SECTION 173 AND SS-1 ( BY GIVING NOTICE OF AT LEAST SEVEN DAYS)
2. AT BOD MEETING FIXING THE DATE,TIME AND VENUE OF THE GENERAL MEETING  AND GIVING NOTICE
3. HOLD GENERAL MEETING AND PASS SPECIAL RESOLUTION AND APPROVAL OF ALTERATION IN AOA AND FILE FORM MGT-14 ( FILING OF RESOLUTION AND AGREEMENT TO THE REGISTRAR ALONG WITH THE REQUISITE FILLING WITH IN 30 DAYS  ALONG WITH THE COPY OF NOTICE AND CERTIFIED TRUE COPY OF THE SPECIAL RESOLUTION ALONG WITH EXPLANATORY STATEMENT AND ALSO A PRINTED COPY OF THE ALTERED ARTICLES

• ALTERATION OF ARTICLES UNDER THE ORDER OF THE NATIONAL COMPANY LAW TRIBUNAL
•  ( SECTION 241-242)

1. THE TRIBUNAL MAY ORDER A COMPANY TO ALTER ITS ARTICLES WITH A VIEW TO RESOLVING COMPLAINTS AGAINST UNDER OPPRESSION AND MISMANAGEMENT IN THE COMPANY ON AN APPLICATION MADE UNDER SECTION 241 OF THE ACT. THE ALTERATION MADE UNDER AN ORDER OF THE TRIBUNAL SHALL HAVE THE SAME EFFECT AS MADE BY THE COMPANY IN ACCORDANCE WITH THE ACT.
2. MUST FILE A CERTIFIED COPY OF THE ORDER WITH THE REGISTRAR WITH IN 30 DAYS OF THE ISSUE OF THAT ORDER.

• LIMITATION ON POWER TO ALTER ARTICLES
• A COMPANY CAN ALTER THE ARTICLES OF ASSOCIATION AT ANY TIME BY PASSING A SPECIAL RESOLUTION
• SUBJECT TO CERTAIN LIMITATIONS
• MUST NOT BE AGAINST THE PROVISIONS OF ACT :- LIKE AN ARTICLE CAN NOT AUTHORIZE THE COMPANY TO PAY DIVIDEND OUT OF CAPITAL
• THE MEMORANDUM OF ASSOCIATION IS A SUPREME DOCUMENT AND PROVISIONS OF ARTICLES CAN NOT OVERRIDE IT. LIKE IN HULTON V SCARBROUGH CLIFF HOTEL CO A RESOLUTION WAS PASSED AT GENERAL MEETING OF A COMPANY ALTERED THE ARTICLES BY INSERTING THE POWER TO ISSUE NEW SHARES WITH PREFRENTIAL DIVIDEND. THE MOA CONTAINED NO POWER AND THE ALTERATION WAS HELD TO BE INOPERATIVE

• THE ALTERATION MUST NOT CONTAIN ANYTHING ILLEGAL AND IT SHOULD NOT BE PROHIBTED BY MOA
• NOT BE CONSISTENT WITH ANY ALTERATION MADE BY TRIBUNAL SECTION 404 : WHERE AN ORDER U/S 397 OR 398 MAKES ANY ALTERATION IN MOA AND AOA SHOULD NOT BE INCONSISTENT WITH THE ORDERS BY TRIBUNAL EXCEPT WITH THE APPROVAL OF NCLT
• NO ALTERATION CAN BE MADE IN THE ARTICLES WHICH HAS THE EFFECT OF CONVERTING THE PUBLIC COMPANY INTO PRIVATE COMPANY UNLESS SUCH AN ALTERATION APPROVED BY THE ARTICLES
• NO ALTERATION MAY BE MADE IN EITHER THE  MEMORANDUM OR ARTICLES COMPELLING A PERSON WHO IS MEMBER ON THE DATE OF ALTERATION TO TAKE OR SUBSCRIBE FOR MORE SHARES OR INCREASED HIS LIABILITY WITHOUT HIS CONSENT
• ALTERATION OF ARTICLES WILL BE MADE ONLY BY SPECIAL RESOLUTIONS AS DEFINED IN THE ACT
• SHOULD NOT CAUSE THE REACH OF CONTRACT
• BRITISH MURAC SYNDICATE V ALPERTON RUBBER CO LTD
• AN AGREEMENT PROVIDED THAT SO LONG AS X COMPANY SHOULD HOLD 5000 SHARES IN THE Y COMPANY. SHOULD HAVE THE RIGHT OF NOMINATING TWO DIRECTORS ON THE BOARD OF Y. IN THE Y COMPANY ATTEMPT WAS MADE TO ALTER THE ARTICLE BUT IT WAS STOPPED BY GETTING AN INJUNCTION
• THE POWER TO ALTER THE ARTICLES MUST BE EXERCISED BONAFIDE FOR THE BENEFIT OF THE COMPANY AS A WHOLE. IF THE ALTERATION IS BONAFIDE FOR THE BENEFITS FOR THE BENEFITS OF THE COMPANY AS WHOLE,THE INTEREST MAY BE SACRIFICED
• ALLEN V GOLD REEFS WEST AFRICA LTD

1. THE ARTICLES GAVE THE COMPANY LIEN ON ALL SHARES NOT FULLY PAID UP FOR CALLS DUE TO THE COMPANY
2. A WAS THE ONLY SHAREHOLDERS HOLDING FULLY PAID UP SHARES
3. OWED MONEY TO THE COMPANY FOR CALLS  ON OTHER SHARES
4. A DIED
5. THE COMPANY ALTERED ITS ARTICLES BY DELETING THE WORDS NOT FULLY PAID UP AND GAVE IT SELF POWER TO EXERCISE LIEN ON A’S SHARES
6. ALTERATION WAS GOOD

• FRAUD ON THE MINORITY : MUST NOT CONSTITUTE A FRAUD ON THE MINORITY. THE POWER OF ALTERATION MUST BE EXERCISED IN GOOD FAITH IN THE INTERESTS OF THE COMPANY
• BROWN V BRITISH ABRASIVE WHEEL CO :
• THE MAJORITY WHICH HAS HELD 98% OF SHARES PASSED BY SPECIAL RESOLUTION THAT UPON THE REQUEST OF HOLDERS OF 9/10 OF ISSUED SHARES,A SHAREHOLDERS SHALL BE BOUND TO SELL AND TRANSFER ITS SHRES TO THE NOMINEES AT FAIR PRICE. IT WAS CONSIDERED TO BE INVALID
• RETROSPECTIVE ALTERATION: MAY BE ALTERED AS TO HAVE RETROSPECTIVE EFFECT BUT ALTERATION SHOULD NOT BE SUCH TO INCREASE THE LIABILITY MORE THAN CONTRACTED

• ARTICLES CAN NOT MADE UNALTERABLE
• SHOULD NOT RESULT IN THE DISCRIMINATION BETWEEN TWO GROUPS