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Changes in Memorandum of Association

March 1, 2019

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Changes in Memorandum of Association

“Memorandum of Association” is an important document during incorporation of a company. Section 4 of the Companies Act, 2013 contains the details regarding the same. The changes in Memorandum of Association can be made according to Section 13 of the Act.

Changes in Memorandum of Association

The changes in Memorandum of Association can take place as follows-

A company can alter its Memorandum by passing a special resolution by the procedure given under Section 61 of the Act. This Section relates to the “Power of a limited company to alter its share capital”.

If a limited company is allowed by the Articles of Association then it can change its Memorandum of Association in its general meeting. It can do so for the following purposes:-

To increase its authorized share capital by amount which it thinks fit.
To consolidate all or any of its share capital into shares of larger amount, the amount which is more than existing shares. If the consolidation and division is going to bring a change in the voting percentage of shareholders, it is to be first approved by the Tribunal.
To sub-divide the shares into smaller amount then fixed by the Memorandum. In this case, the sub-division of the proportion between the amount paid and the amount if it is unpaid, the reduced share would be the same as it was in the case of the share from which the reduced share is derived.
To convert all or any of its fully-paid shares into stock.
To reconvert the stock into fully paid up shares of any denomination.
To cancel the shares which at the date on which the resolution was passed, have not been taken or agreed to be taken by any person and which diminishes the amount of share capital by the amount of the shares so cancelled.

If any change is to be made in the name of the company, it has to be according to sub-sections (2) and (3) of Section 4. It has to be with the approval of the Central Government in writing. This approval is not required where the change in the name of the company is the addition or deletion of the word “Private” and there is change in the class of the company.

After the new name is received to the Registrar which relates to the change in name, the Registrar shall enter the new name in the register of the companies in the place of old name. The registrar of company would issue a fresh certificate of incorporation with the new name. The change in the name shall be complete and effective only on the issue of such a certificate.

In case the registered office place is changing from one state to another, the Central Government would first approve it and then it will have effect. The Central Government would dispose the application within 60 days. Before passing the order, it would check whether the change has the consent of the creditors, debenture holders and other persons concerned with the company and the company has made provisions for the due discharge of all its debts and obligations or that adequate security has been provided for such discharge.

A certified copy of Central Government’s approval is to be given to the Registrar within the time and prescribed manner.

If the company has not utilized the money it raised from its prospectus, it will not change its objects which it has mentioned in the prospectus. It can do opposite to this by passing a special resolution and –
The details are published by it in one English newspaper and in one vernacular language newspaper which is read by the people living at the place where the registered office of the company is situated and also is to put on the website of the company indicating the justification for such a change.
The dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the Securities and Exchange Board.

The Registrar is to register the change of the Memorandum in case of the objects of the company and certify the registration within a period of 30 days. This is to be done from the date of filing of the special resolution in accordance with the procedure laid down under the section.

In case of a company limited by guarantee and not having share capital, any change of the Memorandum giving any person a right to participate in the divisible profits of the company otherwise then a member would be considered as void.

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