How can the Memorandum of Association of a Company be Modified?
“In many cases a particular resolution is to be passed by the company with a view to change its memorandum of association. ”
One of the most important documents of a company is the Memorandum of Association. Any alteration in the variety of clauses that find place in a memorandum may have an unfavorable effect on the parties associated with the company.Company laws in various countries permit the use of certain measures for making changes in the memorandum of association. The procedures provided for different clauses vary.
In some cases, consent of the central government is required whereas in others approval at the state level may suffice. However, in each case a particular resolution is to be passed by the company with a view to change its business.
If the company is registered under an unattractive name, it can change it with an ordinary resolution. The central government can also direct the company within one year of its registration to change its name. Rules regarding this are very flexible and vary from country to country
Similarly, a change in the registered office place of a company requires a change in the memorandum of association. Even if the location of the office has to changed within the same country, it cannot be done on a random basis because this change is bound to affect the welfare of shareholders, financiers and staff.
The object clause is the most significant clause in the memorandum. A change in this regard can only be affected with the sanction of Company Law Board. Previously, this authority was vested in the courts.
This clause is a restraint on the company further than which it cannot carry out its activities. The object clause can be changed by passing a singular declaration and by getting the consent of Company Law Board.
An appeal in this regard is also to be made to the Company Law Board for issuing an affirmation. When this change is permitted by the board, a written reproduction of the memorandum as altered ought to be filed with the registrar within a stipulated time after the passing of this kind of order.
If articles so allow, the responsibility of the directors, managing directors etc. can be made limitless by passing a special resolution. The officer concerned should also record his sanction for making the liability limitless. This is not an arbitrary affair but demands deep thought and positive action.
Author - DeeKay
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