Introduction
Section 4(c) of the Companies Act, 2013 (hereinafter, CA, 2013) states that the memorandum of a company states the object for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof. Alteration for the memorandum is given in Section 13. It states that a company can alter provisions of the MOA by special resolution.
It is mandatory as per Section 110 Read with Rule 22 of the Companies (Management and Administration) Rules, 2014 for a public company which is unlisted and has more than 200 members but less than 1000 members, to pass special resolution through public ballot.
Procedure
Step 1- Board Meeting
- To consider and approve alteration of MOA (Memorandum of association).
- Determine a day, date, time, and agenda for passing a special resolution to give effect to the change.
- Approve draft notice for the general meeting along with an explanatory statement giving reason behind passing the special resolution.
- Authorize CS or any other officer to issue notice of the general meeting under the authority of the Board to every member.
- Authorize CS or CFO or any other director of the company to file the requisite form with ROC.
Step 2- Time Bound Disclosures
- In compliance with Regulations 30 and 46(3) Of the SEBI (LODR) Regulations, 2015, a listed company has to disclose the outcome of the board meeting with the stock exchange (where stocks are listed) as soon as reasonably practicable but within 24 hours of the conclusion of the meeting and post the same within 2 working days on the website of the company.
Step 3- General Meeting
- Pass the resolution through Postal Ballot or hold a General Meeting to pass special resolution for alteration in the object clause of the company.
Step 4- Time Bound Disclosures
- In compliance with Regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015, a listed company has to disclose the outcome of the board meeting with the stock exchange (where stocks are listed) as soon as reasonably practicable but within 24 hours of the conclusion of the meeting and post the same within 2 working days on the website of the company.
- Further, Regulation 44 of the SEBI (LODR) Regulations, 2015, a listed company shall submit details of voting result to the stock exchange within 48 hours of conclusion of its general meeting.
- Format is provided by SEBI at SEBI Circular No. 8/2015 dated 04.11.2015.
Step 5- Form and Documents Filing
- Section 11 Read with Rule 24 of the Companies (Management and Administration) Rules, 2014 requires that the special resolution be filed along with explanatory statement with ROC within 30 days of the passing under Form MGT-14.
Step 6- Certificate from ROC
- As per Section 13(9)- when the ROC is satisfied with the new objects then it shall certify the registration in 30 days from date of filing the special resolution.
Step 7- Time Bound Disclosures
- As per regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015 – a listed company, submit the altered MOA to the stock exchanges within 24 hours of from occurrence of the event.
- Update the same within 2 working days.
Step 8- Post Compliances
- As per section 15(1) ensure that the alterations made in MOA are noted in every copy of the MOA.
Estimated Timeline
The procedure for change in objects of a company will take between 8 days to 66-90 days depending upon time consumed at the following stages-
- Board meeting will take minimum 1 day to 8-10 days
- General meeting/postal ballot will take a minimum of 1 day to 23-25 days/45 days
- Filing of a copy of special resolution along with explanatory statement with ROC will take 1 day to 30 days.
- Certificate from ROC will take 5 days.
Conclusion
Memorandum of Association (MOA) of a company lists out the objects with which the company is incorporated. The company cannot take actions beyond the MOA, else the actions would be ultra-vires. Hence, in instances when the company later on chooses to deviate or expand from its stated objects, it has to amend the MOA. The same can be done by following this procedure.
