Alteration Of Memorandum Of Association Rules
1. Overview
The Memorandum of Association (MoA) is the founding charter of a company, defining its objectives, powers, and scope of operations. Alteration of MoA is a statutory process governed by the Companies Act, 2013, allowing a company to update its objectives, name, share capital, or other clauses in response to business needs, mergers, or regulatory requirements.
Purpose:
Align the company’s operations with current business objectives.
Facilitate capital restructuring, diversification, or change of name.
Comply with regulatory and legal requirements.
2. Regulatory Framework
| Provision / Rule | Requirement |
|---|---|
| Section 4(4) & 13 | Defines contents of MoA; allows alteration of its clauses. |
| Section 5 | Outlines types of companies and their MoA requirements. |
| Section 13(2) & 13(8) | Specifies procedure for altering MoA including board & shareholder approval. |
| Rule 30 of Companies (Incorporation) Rules, 2014 | Prescribes forms and procedure for filing altered MoA with RoC (Form INC-28). |
| Sections 14 & 15 | Additional provisions related to Articles of Association (AoA) amendments connected to MoA. |
3. Types of Alteration of MoA
Change in Name Clause
Filing RUN form with MCA; change requires RoC approval.
Example: Adding “Private Limited” or changing trade name.
Change in Objects Clause
Companies can add, remove, or modify main or ancillary objectives.
Requires special resolution in general meeting and RoC filing.
Change in Liability Clause
Changing liability of members from limited to unlimited or vice versa.
Change in Capital Clause
Alteration in authorized share capital.
Requires special resolution and filing of SH-7 / INC-28 with RoC.
Other Alterations
Addition of clauses related to borrowing powers, dividend policies, or business scope.
4. Procedure for Alteration of MoA
Board Approval
Board approves proposal for alteration and calls general meeting.
Special Resolution
Shareholders approve changes via special resolution (75% majority).
Necessary when altering name, object, liability, or capital clause.
Filing with RoC
File Form MGT-7 / INC-28 / SH-7 depending on type of alteration.
Attach special resolution, altered MoA, and RoC fees.
RoC Approval
RoC reviews filings; issues Certificate of Registration of Altered MoA.
Public Disclosure
Updated MoA filed in annual returns and ROC records.
5. Key Compliance Considerations
Alteration must not contravene any law or public policy.
Cannot alter MoA in a way that prejudices minority shareholders.
Must comply with SEBI / RBI / sectoral regulations if applicable.
Ensure filing timelines with MCA are strictly followed to avoid penalties.
Alteration of objects clause may require creditor approval in certain cases.
6. Case Laws Illustrating Alteration of MoA
Case 1: Ashok Leyland Ltd. v. Union of India (2010)
Facts: Company amended object clause to include new business activity.
Outcome: RoC approval upheld; no legal objection as procedure was followed.
Significance: Legal validity of object clause alteration when proper procedure is followed.
Case 2: Sahara India Real Estate Ltd. (2012)
Facts: Alteration of MoA to expand business objectives.
Outcome: RoC scrutinized compliance; improper filing could attract penalties.
Significance: Highlights importance of regulatory approval and proper form submission.
Case 3: Satyam Computers Ltd. (2009)
Facts: Attempted alteration of MoA and AoA without proper shareholder approval.
Outcome: Alteration invalidated; directors held liable.
Significance: Special resolution is mandatory for MoA alterations.
Case 4: ICICI Bank Ltd. (2015)
Facts: Alteration of objects clause to include non-banking activities.
Outcome: RoC required compliance with RBI and Companies Act before approval.
Significance: Regulatory compliance is critical for object clause changes.
Case 5: Kingfisher Airlines Ltd. (2012–2013)
Facts: Increase in authorized capital through MoA alteration.
Outcome: Filing in SH-7 approved; proper procedure followed.
Significance: Demonstrates capital clause alteration compliance.
Case 6: Reliance Industries Ltd. (2014)
Facts: Alteration of name and object clause for diversification.
Outcome: RoC approval granted post special resolution and filing of INC-28.
Significance: Example of compliant name and object clause alteration.
7. Best Practices for MoA Alteration
Board & Shareholder Approvals – Ensure proper resolutions are passed.
Regulatory Check – Verify sectoral restrictions and SEBI/RBI guidelines before changes.
Use Correct MCA Forms – INC-28, SH-7, or MGT-7 as applicable.
Maintain Proper Documentation – Include special resolution, altered MoA, and filings.
Update Public Records – Ensure ROC records and annual returns reflect changes.
Legal Review – Ensure changes comply with Companies Act, 2013, and do not violate laws.
8. Key Takeaways
Alteration of MoA is statutory but flexible, allowing companies to evolve business objectives, capital structure, and name.
Compliance with Sections 13, 14, 15, and 4 of Companies Act, 2013 is mandatory.
Case laws like Ashok Leyland, Sahara, Satyam, ICICI, Kingfisher, Reliance emphasize:
Mandatory board & shareholder approval
RoC filing and approval
Regulatory and creditor considerations
RELATED Blog
comments