CLAT PG Exam > CLAT PG Notes > Company Law > Alteration of Articles of Association
Alteration of Articles of Association | Company Law - CLAT PG PDF Download
Introduction
As per Section 14 of the Companies Act, 2013, a company can modify its articles of association by passing a special resolution, provided it aligns with the conditions in the memorandum of association. This power is crucial for the company's operations.
Conversion Between Public and Private Company
Public to Private Company
- Special Resolution and Tribunal Approval: To convert from a public to a private company, simply passing a special resolution is insufficient. The company must obtain the consent and approval of the Tribunal.
- Filing Requirements: A copy of the special resolution must be filed with the Registrar of Companies within 30 days of passing it. Additionally, the company must file a copy of the altered articles of association and the Tribunal's approval order with the Registrar within 15 days of receiving the order.
Private to Public Company
- Removal of Clauses: A private company can convert to a public company by removing the three clauses specified in section 2(68) that define a private company.
- Filing Requirements: Similar to the public to private conversion, a copy of the resolution and the altered articles must be filed with the Registrar within the stipulated time.
Question for Alteration of Articles of AssociationTry yourself: What is the process for a public company to convert to a private company?View Solution
Limitations on Power to Alter Articles
- Conflict with Memorandum: The alteration must not conflict with the provisions of the memorandum, as the memorandum takes precedence over the articles in case of a dispute.
- Compliance with Companies Act: The alteration should not violate the provisions of the Companies Act or any other company law, as these laws supersede both the memorandum and the articles.
- Tribunal's Authority: The alteration must not contradict the rules, alterations, or suggestions issued by the Tribunal.
- Legality and Public Policy: The alteration should be legal and not against public policy. It must also be in the bona fide interest and benefit of the company.
- Approval for Public to Private Conversion: Any alteration to convert a public company into a private company requires prior approval from the Tribunal.
- Avoiding Contractual Breaches: A company cannot use the alteration to rectify a breach of contract with third parties or to evade contractual obligations.
- Expulsion of Board Members: Altering articles to expel a board member is against company jurisprudence and is not permissible.
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FAQs on Alteration of Articles of Association - Company Law - CLAT PG
| 1. What is the process for converting a private company into a public company? |  |
Ans.The process for converting a private company into a public company typically involves several key steps: First, the company must ensure compliance with the legal requirements set forth in the Companies Act. This includes obtaining approval from the board of directors and shareholders. Subsequently, the company must file the necessary documents with the Registrar of Companies, including a prospectus that outlines the details of the public offering. Finally, the company needs to ensure adherence to the listing requirements of the stock exchange where it intends to be listed.
| 2. What are the main limitations on a company’s power to alter its Articles of Association? | |
Ans.The main limitations on a company's power to alter its Articles of Association include the requirement for special resolution approval from shareholders. Additionally, any alterations made must comply with the provisions of the Companies Act and should not violate existing laws or rights of shareholders. The alterations also cannot be oppressive to minority shareholders or infringe upon any contractual obligations of the company.
| 3. Can a public company convert back into a private company? | |
Ans.Yes, a public company can convert back into a private company, but this process also requires adherence to specific legal requirements. The company must pass a special resolution to alter its Articles of Association and must ensure that it meets the criteria for a private company as defined under the Companies Act. Additionally, it must comply with any regulatory approvals and provide necessary disclosures to shareholders.
| 4. What is the significance of the Articles of Association in a company? | |
Ans.The Articles of Association serve as a critical governing document for a company, outlining the rules and regulations for its internal management and administration. They define the rights, responsibilities, and procedures for shareholders, directors, and officers of the company. The Articles also establish the framework for decision-making processes, the conduct of meetings, and the handling of disputes, thereby ensuring orderly governance.
| 5. Are there any specific requirements for the alteration of Articles of Association? | |
Ans.Yes, there are specific requirements for altering the Articles of Association. The alteration must be approved by a special resolution passed by the shareholders during a general meeting. The company must also file the altered Articles with the Registrar of Companies. Additionally, the alterations should comply with the provisions of the Companies Act, and they should not contravene any legal stipulations or existing contracts.
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Dec 25, 2024 Last updated |
Document Description: Alteration of Articles of Association for CLAT PG 2024 is part of Company Law preparation.
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