Intermediate · Paper 5 – Business Laws & Ethics · Companies Act, 2013 · 3:38
English
Transcript
A company's memorandum is not carved in stone. It can be altered, but only by following Section 13!
Under Section 13, a company may alter its memorandum, with the members' approval by a special resolution. Raghav and Lavanya run Raghav Agro Limited in Tiruppur. They want a new name: Green Harvest Limited.
Lavanya: Raghav, can we simply change our name?
A change of name needs the Central Government's approval in writing. But no approval is needed if the change is only adding or deleting the word Private, on conversion from one class to another. The Registrar then enters the new name, and issues a fresh certificate of incorporation. The change is effective only on that certificate.
Under Rule 29, the application is made in Form I N C 24, and the new certificate is issued in Form I N C 25. But no name change is allowed if the company has not filed its annual returns or financial statements, or has defaulted in repaying matured deposits, debentures, or interest.
Next, the registered office. To shift it from one State to another, say from Tamil Nadu to Karnataka, the Central Government must approve, and it decides the application within sixty days. It checks that the creditors, debenture holders and others consent, or that the company has provided for its debts, or given adequate security.
Raghav: So our creditors must be protected first!
The company files the special resolution with the Registrar, and the Central Government's approval for a name change. For a State shift, a certified copy of the order is filed with the Registrar of each State, and the new State's Registrar issues a fresh certificate of incorporation.
To change its objects, a company that raised money through a prospectus, with some still unutilised, needs a special resolution by postal ballot. The details are published in two newspapers, one English and one vernacular, and on its website, with the justification. Dissenting shareholders get an exit opportunity from the promoters, as per SEBI regulations. And the Registrar certifies the alteration within thirty days.
No alteration has effect until it is registered. And in a guarantee company without share capital, an alteration giving a non member a share in the profits is void.
Note: today, many of these Central Government powers are exercised by the Registrar or the Regional Director. Check with your faculty.
Exam tip! Special resolution for every alteration. Central Government approval for a name change. For a State shift, approval within sixty days. Postal ballot and an exit option for change of objects. And I N C 24 and I N C 25 for the name.
Let's recap. Section 13 allows alteration by special resolution. Name change needs approval and a fresh certificate. A State shift protects creditors. Changing objects needs a postal ballot. And nothing works until it is registered.
Now try the test in the MPA app. In the next video, we will learn how to alter the articles of association.