Any company incorporated under the Companies Act, 2013, is governed by the Act itself and its internal regulations, which are outlined in its Memorandum of Association (MoA) and Articles of Association (AoA). While the MoA defines the company’s scope, objectives, and fundamental details, the AoA lays down the rules for the company’s internal management. Over time, companies may need to amend these documents to align with business expansion, regulatory compliance, or structural changes.
The MoA primarily includes:
• Name Clause: Defines the legal name of the company.
• Registered Office Clause: Specifies the company’s registered address.
• Object Clause: Outlines the primary and ancillary business objectives.
• Liability Clause: Defines liability limitation for members.
• Capital Clause: Declares the authorized share capital.
• Subscription Clause: Lists the initial shareholders and their shareholding.
The AoA governs the internal management and operational framework, covering:
• Share Capital and Variation of Rights
• Lien on Shares
• Calls on Shares
• Transfer and Transmission of Shares
• Alteration of Capital
• Buyback of Shares
• General Meetings and Board Proceedings
• Voting Rights and Proxy
• Appointment and Powers of Directors, CEO, CFO, and Manager
• Dividend, Reserve, and Accounts
• Winding Up Procedures
• Indemnity Clause
The decision to alter MoA or AoA depends on various factors, such as:
• Change in business objectives.
• Change in company structure or management.
• Increase or decrease in authorized capital.
• Business expansion or geographical relocation.
• Regulatory compliance updates.
• Issue a notice at least seven days before the Board Meeting.
• Pass a Board Resolution approving the amendment and authorizing a director to file necessary forms.
• Approve the notice for convening an Extraordinary General Meeting (EGM).
• Conduct an EGM and pass a Special Resolution.
• Authorize a director to submit the required forms to the Registrar of Companies (RoC).
• Within 30 days of passing the resolution, file Form MGT-14 on the MCA Portal.
• Attach supporting documents, including:
o Copy of the Board Resolution.
o Copy of the Special Resolution.
o Amended MoA/AoA.
• Upon verification, the RoC approves the amendment.
• The company must:
o Update all copies of the MoA and AoA.
o Inform relevant authorities (GST, Income Tax, Banks, etc.).
Example:
ABC Pvt. Ltd. started as a trading company but later decided to enter manufacturing. To align with this, the Object Clause of its MoA was amended. The Board passed the resolution, an EGM was held, and Form MGT-14 was filed. Within 30 days, RoC approved the changes, and ABC Pvt. Ltd. successfully expanded its operations.
Example:
XYZ Pvt. Ltd. wishes to raise capital and to govern the terms and conditions for operations of company and management function, Shareholders Agreement is required. To give effect to this capital raise and execution of shareholders agreement, amendment in MoA and AoA is required.
Amending the MoA and AoA is essential for companies to adapt to evolving business needs. A structured approach, compliance with the Companies Act, and timely filings ensure smooth transitions without legal complications.
For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091 to ensure all statutory obligations are met on time.
The MoA is the charter of a company. It defines the scope of the company’s operations, its objectives, and its relationship with the outside world. It specifies the permitted activities the company can engage in.
The AoA are the internal rules and regulations that govern the management and administration of the company. It defines the rights and responsibilities of the directors, shareholders, and other internal stakeholders. It deals with the how of the company’s operations within the boundaries set by the MoA.
The MoA and AoA are crucial because they: Define the company’s powers and limitations (MoA). Govern the internal management and operations of the company (AoA). Provide a framework for decision-making. Help prevent disputes among stakeholders. Are publicly available documents, providing transparency.
Yes, both the MoA and AoA can be altered or amended, but the process is governed by the Companies Act, 2013, and requires adherence to specific procedures.
The MoA can be altered or amended by passing a special resolution at a general meeting of shareholders. Certain alterations may require prior approval from regulatory authorities (e.g., change of registered office from one state to another).
Common reasons include: Change in the company’s business activities. Change of registered office from one state to another. Alteration of the objects clause. Increase in authorized share capital.
The procedure generally involves: Passing a special resolution at a shareholders’ meeting. Obtaining necessary approvals (if required). Filing Form SH-7 with the Registrar of Companies (ROC) within 30 days of the resolution. Incorporating the alteration in the MoA.
The AoA can be altered or amended by passing a special resolution at a general meeting of shareholders.
Common reasons include: Changes in the company’s management structure. Changes in the rights and responsibilities of directors or shareholders. Changes in the procedure for share transfers. Adoption of new regulations or best practices.
The procedure generally involves: Passing a special resolution at a shareholders’ meeting. Filing Form SH-7 with the ROC within 30 days of the resolution. Incorporating the alteration in the AoA.
The primary form is SH-7 for both MoA and AoA alterations.
Documents typically include: Notice of the shareholders’ meeting. Special resolution passed by the shareholders. Altered MoA or AoA. (If applicable)
Statutory fee is prescribed by the MCA and Professional fees for seeking professional advice.
The process can take several weeks, depending on the ROC’s processing time.
Non-compliance can lead to penalties and legal issues.
Altering these documents retrospectively can be complex and may have legal implications. It’s best to consult with a legal professional in such situations.
These documents are publicly available on the MCA website.
A special resolution requires a higher percentage of votes (usually 75%) than an ordinary resolution.
Yes, within the boundaries of the Companies Act.
Yes, the MoA is altered to reflect the new name.
Existing contracts generally remain valid, but it’s advisable to inform the other parties about any relevant changes.
Consult with a legal professional to ensure compliance with the Companies Act.
Challenges can include obtaining shareholder approval, complying with procedural requirements, and coordinating with the ROC.
Proper planning and communication are essential for a smooth transition.
A company secretary plays a crucial role in ensuring compliance with the legal procedures.
The MCA website is the official source for notifications and circulars.
