Procedure for altering Articles of Association :  Legal provisions, Procedure, Draft resolution

What is Articles of Association?

As per Section 2(5) of the Companies Act, 2013 “articles” means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act;

By-laws or rules and regulations which govern the management of its internal affairs and the conduct of its business.

Company can alter its AOA by way of addition, deletion, modification, substitution, or combination of them.

They are framed with the object of carrying out the aims and objects as set out in the Memorandum of Association.

Legal provisions:

Section 14 of the Companies Act, 2013  

14. Alteration of Articles  

(1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of– (a) a private company into a public company; or (b) a public company into a private company:  

Provided that where a company being a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company under this Act, the company shall, as from the date of such alteration, cease to be a private company:  

[Provided further that any alteration having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Central Government on an application made in such form and manner as may be prescribed: Provided also that any application pending before the Tribunal, as on the date of commencement of the Companies (Amendment) Ordinance, [2019], shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.]]] *

(2) Every alteration of the articles under this section and a copy of the order of the [Central Government]] Tribunal approving the alteration as per sub-section (1) shall be filed with the Registrar (INC -27), together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same. (3) Any alteration of the articles registered under sub-section (2) shall, subject to the provisions of this Act, be valid as if it were originally in the articles.  

Procedure :

  1.  Notice of Board Meeting :

Issue notice in writing to every director

The notice must be a seven day notice.

The notice must contain time, date and venue for the meeting and detailed agenda of the business, Notes to agenda & draft resolution.

(As per section 173 and SS-1)

2. Hold Board Meeting

  • Consider and decide which of the articles are to be altered and pass a formal resolution in this respect (Refer Draft resolution).

  • Approve notice, agenda and explanatory statement to be annexed to the notice of the general meeting as per 102 of the Act (Refer Draft resolution & Explanatory statement).
    • Authorize the Company Secretary or any other competent officer of the company to issue notice of the general meeting as approved by the Board.
  • 3. Notice of General Meeting:

Issue notice of the general meeting to all the members of the company, its directors and the auditors (Section 101).

.4. Hold the general meeting

Check the Quorum;

Check whether auditor is present, if not. Then Leave of absence is Granted or Not. (Section- 146) and

Pass the proposed special resolution.[Section-114(2)],

Approval of Alteration in AOA.

5. File with the ROC, Form MGT – 14 within 30 days

File with the ROC, Form MGT – 14 along with a certified copy of the special resolution and the explanatory statement annexed to the notice of the general meeting at which the resolution was passed and a copy of the Articles of Association, within 30 days of the passing of the resolution along with the prescribed filing fee.

6. File with the ROC, Form INC-27 within 15 days

Every alteration of the articles under this section and a copy of the order of the [Central Government]] Tribunal approving the alteration as per sub-section (1) shall be filed with the Registrar (INC -27), together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same.

7. Make necessary changes in all the copies of the articles of association of the company lying in the office of the company.

For Listed Company:

  1. Send copies of the notice to each stock exchange where the securities of the company are listed within 24 hour of the occurrence of event [Refer Regulation 30(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]. A general notice of the general meeting may also be published in newspapers.
  2. Intimate stock exchange about alterations in memorandum and articles of the company within 24 hours of the occurrence of event. [Refer Regulation 30(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]
  3. Send to each stock exchanges, a copy of the proceedings of the general meeting in case of a listed company within 24 hour of the occurrence of event [Refer Regulation 30(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015].

Draft Agenda, proposal, resolution of Board Meeting, Minutes – Gist of Discussion

Agenda Title: To amend Articles of Association of the Company

Proposal

An amendment to the AOA of the Company is required in view of __________. A detailed proposal is placed before the Board for the same.

The Board members may discuss and approve the following resolution.

Proposed Resolution

“Resolved that subject to the provisions of Section 14 and other applicable provisions, if any, of the Companies Act, 2013 and subject to the approval of the members at the General Meeting, the Articles of Association of the Company be and hereby amended by inclusion of the following clause at__________________.

Resolved further that an Extraordinary General Meeting of the members of the Company be called and held at _______ on _________ day of_________at ___________ as per the draft notice and explanatory statement placed before the meeting duly initiated by the Chairperson for the purpose of identification.

Resolved further that the draft notice of Extraordinary General Meeting be and is hereby approved and the Company Secretary and the Directors be and are hereby authorized severally to issue the said notice to the members and others who are entitled for the same, and take all necessary action in this regard.

Resolved further that Directors and the Company Secretary of the Company be and are hereby authorized severally to file necessary e-forms with the Registrar of Companies, __________, in applicable e-Forms and to do all such acts, deeds and things as may be necessary to give effect to the above resolution.”

Minutes – Gist of Discussion

The Board discussed the proposal to amend the Articles of Association of the Company in view of ____________, a copy of which was tabled at the meeting for approval. The following resolution was approved.

Draft Agenda, Explanatory Statement, proposal, resolution of General Meeting,  Minutes – Gist of Discussion

Agenda Title: Amendment to Articles of Association

Proposed Resolution

To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:

“Resolved that pursuant to Section 14 of the Companies Act, 2013, the Articles of Association of the Company be and is hereby altered as below:________________.

Resolved further that the Board of Directors and Company Secretary be and are hereby severally authorised to sign all such forms and returns and other documents and to do all such acts, deeds and things as may be necessary to give effect to the aforesaid resolution.”

Minutes – Gist of Discussion

Proposed by _________________, seconded by ___________ Resolution passed unanimously/ by majority / rejected.

Explanatory Statement

The Board of Directors of the Company at its meeting held on DD/MM/YYYY_ recommended that the existing Article of Association be altered with the text as set out in the resolution. Consent of the Members by way of Special Resolution is required for such alteration of Articles of Association in terms of the provisions of Section 14 of the Act.

None of the Directors and Key Managerial Personnel of the Company, or their relatives, is interested in this Special Resolution.

The Board recommends this Special Resolution for your approval.

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