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Alteration of Articles of Association can be done by the shareholders passing a special resolution in a general meeting or by written resolution. A copy of the resolution and the new Articles of Association of association must be sent to Companies House within 15 days. The Alteration of Articles of Association cannot be made in breach of other company law rules and there are protections against such changes where they increase the liability of individual shareholders, vary the rights of any class of shareholders or otherwise prejudice minority shareholders. Special resolutions require the votes of 75% of members present in person or by proxy, who are entitled to vote and do vote at the meeting. The meeting at which the resolution is proposed must have had at least 14 days’ notice, unless a shorter period was agreed by a majority in number of members holding at least 90% of the shares (95% in the case of public companies). Alternatively, the written resolution procedure can be used, and the special resolution will be passed if approved by shareholders representing not less than 75% of the total voting rights of the shareholders entitled to vote on the written resolution on the day it is circulated. This Special Resolution – Alteration of Articles of Association is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
Any Alteration of Articles of Association of must be made in good faith for the benefit of the company as a whole. It is for the shareholders to determine whether or not the alteration is for the benefit of the company. The Alteration of Articles of Association may affect the rights of a member as between himself and the company by retrospective operation, since the shares are held subject to the statutory power of altering the Articles of Association. If a contract whether with a member or an outsider is so drawn as by its terms or implication to prohibit the company from Alteration of Articles of Association to the prejudice of the other contracting party, then, although the company cannot be precluded from altering its Articles of Association, thereby giving itself power to act upon the provisions of the altered Articles of Association, so to act may nevertheless be a breach of the contract. The Articles of Association cannot be so altered as to increase the liability of a member to contribute to share capital or otherwise to pay money to the company without his consent; and a special resolution altering Articles of Association may be impeached if its effect is to discriminate between the majority of shareholders and the minority shareholders so as to give the former an advantage of which the latter are deprived. In a case where an order by the court by way of protection of a member of the company against unfair prejudice requires the company not to make any, or any specified, alteration in its Articles of Association, the company has no power without leave of the court to make any such alteration.
Procedures for Alteration of Articles of Association
1. Take the necessary decision by convening a Board Meeting to change all or any of the existing Articles of Association and fix up the day, time, place and agenda for a general meeting for passing special resolution to effect the change.
2. It must be seen that for Alteration of Articles of Association the company conforms to the provisions of the companies Act, 1956 and the conditions contained in the Memorandum of Association of the company. 3. See that any such Alteration of Articles of Association does not increase the liability of any member who has become so before the alteration to contribute to the share capital of or otherwise to pay money to, the company. 4. See that any such Alteration of Articles of Association does not have the effect of converting a public company into a private company. If such is the case, then make an application to the Central Government for such alteration. 5. See that any such Alteration of Articles of Association does not provide for expulsion of a member by the company. 6. Issue notices for the General Meeting proposing the Special resolution and explaining inter alia, in the explanatory Statement the implication and reasons of the changes being proposed. 7. If the shares of the company are enlisted with any recognized Stock Exchange, then forward copies of all notices sent to the shareholders with respect to change in the Articles of Association to the Stock Exchange. 8. Hold the General Meeting and pass the special resolution. 9. File with the stock exchange with which your company is enlisted six copies of such amendments as soon as the company adopts it in General Meeting. Out of the six copies, one copy must be a certified true copy. 10. Forward promptly to the Stock Exchange with which your company is enlisted three copies of the notice and a copy of the proceedings of the General Meeting. 11. File the Special resolution with the concerned Registrar of companies with explanatory statement in Form No.23 within thirty days of its passing after payment of the requisite filing fee in cash as per Schedule X. If the Articles of Association has been completely or substantially changed, file a new printed copy of the Articles paying the requisite fee in cash prescribed under Schedule X to the Companies Act, 1956. payments up to Rs.50/- 12. Effect the changes in all copies of the Articles of Association of association. 13. Any Alteration of Articles of Association so made be as valid as if originally contained in the Articles of Association and be subject to alteration by Special Resolution as above.
14. If the Alteration of Articles of Association is pursuant to an order of the Company law Board made under section 397 or 398 then see that such alterations is not inconsistent with the said and if it is so then obtain first leave of the Company Law Board to make such alteration.
We at Taxmantra.com have a dedicated corporate law team comprising of Chartered Accountants, Company Secretaries and Legal Practitioners who expertly handles Alteration of Articles of Association for companies. Also, we provide Company/LLP/Partnership Registration/Incorporation services, along with the annual compliances that each of the entity is supposed to adhere to, in order to remain in perfect compliance with the law. Further, we also have a direct taxation team who would plan the best tax structure for each of these entities.
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