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8/8/2019 Company Law and Secretarial Practice
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COMPANY LAW AND
SECRETARIAL PRACTICEAlteration of memorandum ofassociation
- Pallavi Joshi
- Sowmya A Swith guidance of S.P.Sir
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INTRODUCTION
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The purpose of Memorandum ofAssociation is to enable the share holders,
creditors and those who deal with the
company to know what its permittedrange of enterprise is.
- Lord Macmillan
MEMORANDUM OF
ASSOCIATION
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Six Clauses
CONTENTS OF MEMORANDUM OF
ASSOCIATION
Name Registeredoffice
Liability CapitalAssociation
or subscription
Objects
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AS PER SEC. 16
a company shall not alter theconditions contained in its
memorandum, except in thecases, in the mode, and to theextent, for which expressprovision is made in theCompanies Act.
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ALTERATION OF THE NAME CLAUSE:
When a company is registered with a name which
is identical with or similar to the name of an
existing company by mistake.
When central government directs a company to
change its name.
When a company wants to change its name of itsown accord.
When a company wants to add or delete the word
private from its name.
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ALTERATION OF
REGISTERED OFFICECLAUSE Change of registered office within
the same city. Change of registered office within
the same state.
Only the change of registered officefrom one state to another involves
alteration of the memorandum.
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ALTERATION OF OBJECT CLAUSE:
Purposes:
To carry on its business more economically.
To attain its main purpose by new means.
To enlarge its local area of operation.
To amalgamate the company with any other
company.
To sell or dispose of the whole or any part of the
undertaking of the company.
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Passing of special resolution at the extraordinary general
meeting.
Filing of a copy of the special resolution with the Registrar.
Obtaining the confirmation of the company law board.Filing of a certified copy of confirmation order of the company
law board with the Registrar.
Filing of the altered copy of the memorandum of association
with the Registrar.
Obtaining the certificate of registration of the change.
PROCEDURE:
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DOCTRINE OF ULTRA VIRES
2 Latin words ultra and vires.
Ultra means beyond.
Vires means powers.
ultra vires literally means doing an act which isbeyond the legal powers of a company.
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Acts ultra vires the directors.
Acts ultra vires the articles of
association.
Act ultra vires the memorandum ofassociation
3 CATEGORIES OF ULTRA VIRES :
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ALTERATION OF LIABILITY CLAUSE
The liability clause of a limited company cannotbe altered so as to make the liability of the membersunlimited.
However, the liability clause can be altered so asto make the liability of the directors, managingdirector or manager of the company unlimited.
And it may be noted that the unlimited liability ofthe members of an unlimited company may bechanged to limited company.
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Passing of special resolution.
Obtaining of consent of the directors, managingdirectors or manager.
Filing of a copy of the special resolution with theRegistrar.
Filing of an altered copy of the memorandum withthe Registrar.
PROCEDURE FOR ALTERING THE
LIABILITY OF DIRECTORS, MD OR
MANAGERS OF LIMITED COMPANY TO
UNLIMITED LIABILITY:
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Passing of a special resolution.
Obtaining the courts confirmation.
Filing of a copy of the special resolution with the Registrar.
Filing of a copy of the courts confirmation order with the
Registrar.
Obtaining the certificate of registration from the Registrar.
PROCEDURE FOR ALTERING THE
UNLIMITED LIABILITY OF THE
UNLIMITED COMPANY TO LIMITEDLIABILITY:
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ALTERATION OF CAPITAL
CLAUSE Alteration of share capital
Reduction of share capital
Variation of the rights of the
shareholders
Re-arrangement of share capital
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ALTERATION OF SHARE
CAPITAL It may increase its authorised share
capital.
It may consolidate or sub-divide the wholeor part of its existing shares into shares of
larger or smaller denominations.
It may convert its fully paid-up shares into
stock or vice versa.
It may cancel its unissued shares.
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REDUCTION OF SHARE CAPITAL
Reduction of share capital is
permitted for legitimate purposes only.
For instance, a co., may be allowed the
reduction of share capital-
To write off lost capital. To pay off surplus capital.
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VARIATION OF THE RIGHTS
OF SHAREHOLDERS
For ff cti g t is-
Memor mor rticles of t e co., must
ermit suc v ri tionof rig ts.
s eci l resolution s nctioningthe v ri tion
must e ssed t separatemeetingoftheshareholders ofthe class affected.
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PROCEDURE :
Authority of the articles to reduce capital must
be secured.
Special resolution must be passed. A petition to the court for an order confirming
the reduction must be made.
A certified copy of the Courts confirmation
order and changed memorandum must be
filed.
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RE-ARRANGEMENT OF SHARE
CAPITAL
this can be effected by- It can consolidate preference shares
and equity shares into one class of
equity shares.
OR
It can convert a part of equity sharesinto preference shares.
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