Changes to MOA of Company
Changes to MOA of Company
Changes to Memorandum of Association (MOA) can be effected through a special resolution at the shareholders meeting. Changing the MOA of a company is a complex and extensive procedure, hence due to professional care must be taken during the procedure. In this article, we look at the various reasons for effecting changes to the MOA of a company.
Main Clauses of Memorandum of Association
A company can alter its memorandum by means of alteration in the following clause of Memorandum of Association:
- Name Clause
- Object Clause
- Capital Clause
- Registered Office Clause
- Liability Clause
- Subscription Clause
Alteration of Name in MOA
Changes to the name of a company would require an alteration to the MOA by passing a special resolution. In case changes to the name of a private limited or public limited company is effected, consent or authorization of Central Government is not required. In any other case, the consent of the Central Government would be required. Further, in the event of a company being registered with a name that bears a resemblance to the name of an existing company, the Central Government might ask it to alter its name. In such a case ordinary resolution is adequate.
In some cases, the alteration of the name may not be allowed to the following companies:
- Not filing the annual returns or financial statements due for filing with the Registrar or
- Failed to pay or repay the matured deposits or debentures or interest thereon
Change of Registered Office – State to State
A company must make changes to the MOA for transfer of registered office from one state to another. Usual reasons for changing registered office from one state to another include:
- to conduct business more professionally and economically;
- to attain the significant purpose of the company by sophisticated means;
- to develop its operations in the current location;
- to manage any of the existing objects;
- to sell a whole or part of the business enterprise;
- to merge with other business or person.
In the event of the registered office has to be shifted from one State to another State, a special resolution has to be approved and approval from the Company Law Board has to be acquired by the company. The changed memorandum must be filed with the Registrar of the State from which the company is changing and also to the Registrar of the State to which the company is shifted. On approval of the Registrar of Companies (ROC), changes must be made in the MOA of the company to reflect the new state where the registered office is situated.
Alteration of Objects Clause
Changes to the object clause of a private limited company can be effected easily with minimal hassles. However, changing the objects of a company that has raised money from the public will require a special resolution. Further, the special resolution must be published in newspapers both in English and another in local language which is in circulation at place where the registered office of the company is located. The details should also be displayed on the company’s web site if any along with the justification for modification in objects of the company. A certified copy of the order from the government would be filed by the company with the RoC along with the printed copy of the altered MOA within the term period of three months from the date of the order.
Finally, all dissenting shareholders should be given an opportunity to exit by the promoters and shareholders possessing control of the company. This opportunity must be given in accordance with regulation specified by the Securities and Exchange Board of India (SEBI).
Procedure for Alteration in Memorandum of Association
The steps involved in changing the alteration of the MOA are as follows:
Convey Board Meeting of Directors
Step 1: The company has to issue a notice of board meeting to all the directors at least 7 days before the date of the board meeting. Provide the agenda along with notes of agenda and draft resolutions for the meeting.
Held Board Meeting
Step 2: The resolutions with respect to the alteration in MOA has to be passed during the board meeting. Then the approval to be obtained for the alteration in MOA and recommending the proposal for members consideration while passing the special resolution. The date, time and venue of the board meeting has to be fixed and also authorizing a director or any person to send the notice for the same to the members.
Issue Notice of General Meeting
Step 3: The EGM notice would be given at least 21 days before the actual date of EGM. The EGM can be called on shorter notice with the consent of at least a majority in number and 95% of such part of the paid-up share capital of the company granting a right to vote at a meeting:
- All the Directors.
- Auditors of Company
The notice would determine the place, date, day and time of the board meeting and contain the statement on the business that to be transacted at the EGM.
Hold General Meeting
Step 4: Check the quorum and also check whether an auditor is present, if not then the leave of absence is granted or not. The approval to be obtained for the alteration in MOA of passing the Special Resolution.
Filing Form with ROC
Step 5: File the form MGT-14 (Filing of Resolutions and agreements under section 117) with the Registrar along with the requisite filing within the period of 30 days of passing the special resolution, along with the following documents:
- Certified copies of Special Resolution along with an explanatory statement
- Copy of the Notice
- Copy of the Altered Memorandum of Associations.
Alteration of Liability Clause
The liability clause can be changed so as to make the liability of the directors unlimited. In any case, the liability of the shareholder cannot be made unlimited. The liability clause can be modified by passing a special resolution. A copy of the resolution should be filed with the Registrar within a period of 30 days.
Alteration of Capital Clause
A company can change its capital clause by the passing of an ordinary resolution in a general meeting. Alteration of capital may relate to:
- Subdivision of the shares
- Consolidation of the shares
- Conversion of shares into stock and annulment of unsubscribed capital.
Within a period of thirty days of passing a resolution, the altered Articles and Memorandum have to be submitted to the Registrar.
Alteration of Authorized Capital
A Company looking for the issue shares must check the current authorized capital of the company, as the issue cannot be in excess of the amount of authorized capital. Therefore in the view of the above, a company may have to increase the authorised capital and make modifications to the MOA of the company.