Articles of Association (AOA) Amendment

The Articles of Association (AOA) of a company outline the rules and regulations that dictate its internal management. These articles specify the procedures for managing various aspects and operations within the company. A company article has to be registered at the time of company incorporation. A company can amend its Articles of Association (AOA) post-incorporation as and when such changes are deemed necessary for its management. AOA Amendment is important for companies to stay up-to-date and efficient. Once a company has altered its Articles of Association (AOA), it must file Form MGT-14 with the Ministry of Corporate Affairs.

At IndiaFilings, we offer expert assistance in navigating through the process of the AOA Amendment, ensuring that all the necessary details are accurately and efficiently handled. Contact our experts today for assistance and ensure a smooth, compliant process.

Article of Association

The Articles of Association (AoA) is a crucial document for a company's internal administration and governance. It contains the rules, regulations, and bylaws that govern the company's internal management and operations. The AoA is an integral part of a company's constitution and defines various aspects of its functioning, including:

• Directors' Roles: Rules about what the directors do and how they are appointed or removed.
• Shareholder Rights: Explains shareholder rights like voting, getting dividends, and selling shares.
• Board Meetings: Guidelines for how meetings of the directors are held.
• General Meetings: Rules for big company meetings, including how decisions are voted on.
• Profit Sharing: How the company's profits are distributed to shareholders.
• Borrowing Money: Rules about how the company can take loans.
• Changing the AOA: How to update these rules.
• Shutting Down the Company: Steps for closing the company and distributing its assets.
• Company Seal: If there's a company seal, rules for using it.

It's important to note that the AoA can be altered through a formal legal process as per the provisions of the Companies Act or other relevant laws.

AOA Amendment

AOA Amendment refers to the process of changing the Articles of Association of a company. Amending the AOA allows a company to update or change these rules to adapt to new circumstances, comply with legal requirements, or realign with the company's evolving objectives and strategies.

When a Company Can Amendment AOA?

A company can alter its Articles of Association (AoA) under various circumstances, including

Conversion of a Private Company into a Public Company

When a private company decides to become a public company, it often needs to make significant changes to its AoA to comply with the additional regulatory requirements applicable to public companies. This includes changes related to shareholding, disclosures, and governance.

Conversion of Public Company into Private Company

Conversely, if a public company intends to become a private company, it must amend its AoA to align with the reduced regulatory requirements for private companies. This may involve changes in shareholding and governance structures.

Alteration in any of the Existing Articles

• Change in Business Objectives: When the company's business objectives or activities evolve or expand, it may need to amend the AoA to reflect these changes.
• Change in Share Capital: If the company intends to increase or decrease its share capital, the AoA may need to be altered to accommodate these changes.
• Change in Name: When a company decides to change its name, it must amend the AoA to reflect the new name.
• Alteration of Share Classes: If the company wants to create new classes of shares or modify existing ones, the AoA may need to be revised.
• Alteration of Share Rights: Changes in the rights attached to shares, such as voting rights or dividend preferences, may require alterations to the AoA.
• Change in Registered Office: If the company moves its registered office to a different location, the AoA should be updated to reflect the new address.
• Change in Board Structure: Alterations may be necessary to modify the composition or powers of the Board of Directors.
• Conversion of Company Type: Converting from a private company to a public company (or vice versa) often requires substantial changes to the AoA.
• Compliance with Legal Requirements: To ensure compliance with company law or regulations changes, the AoA may need to be amended.
• Special Resolutions: Any changes that require approval by a special resolution of shareholders will necessitate amendments to the AoA.

Key Requirements for Changing a Company's AoA

For the Articles of Association (AOA) Amendment, these are the main rules to follow:

• Legal Guidelines: The changes need to be in line with the rules set by the Companies Act and the company's own Memorandum.
• Special Agreement for Entrenchment: If the company wants to add special, hard-to-change rules (entrenchment provisions), all members of a private company must agree, or a majority vote is needed in a public company.
• Approval for Changing Company Type: If the company is switching from public to private or vice versa, it must get a majority agreement (Special Resolution) for this change.Procedure for AoA Amendment.

Procedure for AOA Amendment

A company may modify, delete or add any article in the following manner:

Step 1: Board of Directors Meeting

Convene a meeting of the Board of Directors following Section 173 and Secretarial Standard (SS-1).

• Notice Issuance: Send a notice of the Board Meeting to all Directors of the Company. The notice should reach them at least 7 days before the meeting date. In urgent cases, a shorter notice can be issued.
• Attach Supporting Documents: Include the meeting's agenda, notes to the agenda, and a draft resolution with the notice.
• Board Resolution: During the Board Meeting, discuss and pass the necessary Board Resolution for altering articles. Authorise either the Company Secretary or any Director to sign and file the relevant forms with the Registrar of Companies and perform any actions necessary to implement the Board's decision.
• General Meeting Arrangements: Decide on the date, time, and venue of the General Meeting during the Board Meeting. Approve the draft notice convening the General Meeting and include an explanatory statement as required by Section 102 of the Companies Act, 2013. Authorize either a Director or the Company Secretary to sign and issue the notice of the General Meeting.
• Draft Minutes Circulation: Within 15 days from the conclusion of the Board Meeting, prepare and circulate the draft minutes to all Directors. Distribute the draft minutes via hand delivery, speed post, registered post, courier, or email.
• Request comments and feedback from all Directors.

Step 2: Convene General Meeting

Arrange for a General Meeting as per Section 96, 100, and Secretarial Standard (SS-2).

• Notice Issuance: Issue a written notice for the General Meeting at least 21 days before the scheduled meeting date. Notice delivery can be done by various means such as hand delivery, ordinary post, speed post, registered post, courier, facsimile, email, or any other electronic method.
  In certain cases, a Shorter Notice can be used, but this requires consent from a majority in number and at least ninety-five percent of the paid-up share capital of the company with voting rights, as outlined in Section 101.
• Recipients of Notice: Ensure that the notice is sent to all relevant parties, including Directors, Members, Auditors of the Company, Secretarial Auditor, Debenture Trustees, and others entitled to receive the notice of the General Meeting.
• Notice Content: Specify the precise day, date, time, and full address of the meeting venue in the notice. Include a statement outlining the business to be transacted during the General Meeting.
• General Meeting Conduct: Conduct the General Meeting on the designated day. Pass a Special Resolution for the alteration of the Articles of Association.
• Disclosure to Stock Exchange: Share the proceedings of the General Meeting with the Stock Exchange within 24 hours from the meeting's conclusion. Post the same information on the company's website within 2 working days.
• Minutes Preparation: Prepare detailed minutes of the General Meeting. Obtain signatures from relevant attendees. Organise and compile the minutes following established procedures.

Step 3: File Form MGT-14 with ROC

Submit Form MGT-14 to the Registrar of Companies (ROC) within 30 days after the Special Resolution is passed during the General Meeting.

Required Attachments:

• Ensure the following documents are attached as part of the Form MGT-14 submission:
• Certified True Copies of the Special Resolutions, including the explanatory statement.
• Copy of the notice of the meeting sent to members, along with all annexures.
• Altered Articles of Association should include any newly inserted provisions, especially those related to entrenchment (if applicable).
• Copy of the attendance sheet from the General Meeting.
• If a Shorter Notice was used, include the consent related to it, if applicable.
• Every change made to the Articles of Association must be recorded in every copy of the articles.

This ensures that any amendments or modifications to the Articles are reflected consistently in all document copies for the sake of accuracy and compliance with Section 15(1).

Note: A company is not required to pay stamp duty when making alterations to its articles. Stamp duty has to be paid only at the time of company incorporation.

Step 4: Effect of AOA Amendment

The revised Articles of Association become effective when the board resolution is passed. These modified articles carry the same legal weight as the original ones. However, these alterations are only valid if they adhere to the processes outlined in the Companies Act and the company's Memorandum. Additionally, it's essential to reflect these changes across all copies of the Articles of Association.

Streamlining AOA Amendments with IndiaFilings

IndiaFilings offers comprehensive assistance in the amendment of the Articles of Association (AOA) for companies. Our expert team guides businesses through the entire process, ensuring that all modifications comply with the relevant provisions of the Companies Act. We provide end-to-end support, starting from drafting the necessary resolutions and preparing the revised Articles of Association to file the required forms with the Registrar of Companies.

Contact us today to ensure your AOA Amendments are handled efficiently and in compliance with legal requirements.