Introduction
Articles of Association (AOA) are defined in Section 5 of the Companies Act, 2013 (hereinafter, CA, 2013) as the regulations for management of the company. It may contain such provisions as may be prescribed. Section 5(3) provides for entrenchment of articles which results in difficulty of altering the articles as the procedure applied to alter them is more restrictive than those applicable in case of a special resolution. Further, Section 5(4) provides that the provisions of AOA can be entrenched either at the time of formation of the company or later on by passing a special resolution.
Alteration of AOA is provided for in Section 14 of the CA, 2013. It says that articles can be altered by way of a special resolution. It can also alter the articles giving effect to conversion of private company into a public company and a public company converting into a private company. Further, it must be ensured that the articles proposed to be altered are not entrenched and if they are then the specific mode of amendment of such provisions should be followed. In case of alterations that lead to the effect of converting public company to a private company or the private company to the public company then the separate procedure as discussed here should be followed.
Step by Step Guide to Alter the AOA of a Company
1. Call a Board Meeting
In conformity with the Sections 14(1) and 173 and Secretarial Standards- I, hold a board meeting wherein relevant factor such as the-
- Consider and approve alteration of AOA of the company.
- Then ascertain the day, date, time, and agenda for the general meeting for passing the special resolution to give effect to the change.
- Then a draft notice for the general meeting will be drafted and a director will be authorised to issue notice for the general meeting.
- Authorize CS (Company Secretary) or any other officer to intimate every member for the upcoming general meeting by issuing a notice.
- Authorize the CS/CFO (Chief Financial Officer)/ any director to file a copy of the special resolution with ROC (Registrar of Company)
2. Call a General Meeting
- As per sections 14(1), 100 and 110 and Secretarial Standards-2, a general meeting must e called to pass a special resolution for alteration of AOA.
- Resolution maybe passed by using the mode of postal ballot.
3. Time Bound Disclosures
- A listed company is required to submit proceedings of the general meeting to stock exchanges where it is listed within 24 hours of conclusion of the general meeting as per regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015.
- Further, it should post the findings of the meeting on the company website within 2 days.
- Regulation 44 of the SEBI (LODR) Regulations, 2015 requires that the listed company shall submit to the stock exchange within 48 hours of conclusion of its general meeting the details regarding the voting rights in the format specified by SEBI.
4. Filing of Forms and Documents
- Section 117 read with Rule 24 of the Companies (Management and Administration) Rules, 2014 requires that a copy of the special resolution along with an explanatory statement is filed with the ROC within 30 days of passing in Form MGT-14 along with relevant documents and fees.
5. Post Compliances
- To be in conformity with Section 15(1), it must be ensured that the alterations made in articles is noted in every copy of AOA.
Documents Required
- Filing of special resolution with ROC- Form MGT-14.
- Certified true copy of special resolution along with copy of explanatory statement under S. 102 of CA, 2013.
- Altered copy of AOA.
Conclusion
The process of altering the Articles of Association of a company can take between 3 days to 61-65 days. Depending upon the time consumed at each stage. Board meeting can take 1 day to 8-10 days and then general meeting can take between 1 day to 23-25 days. Further, the filing of a copy of the special resolution has a maximum time limit of 30 days. As AOA provides details related to the management of the company, it is crucial to keep the AOA up-to-date and not act in contravention of the same as the act would amount to ultra-vires.
