The Companies Act

2013
We have discussed
• A brief history
• Definition of a Company
• Characteristics of a Company
• Separate Legal Entity
• Limited Liability
• Perpetual Succession
• Separate Property
• Transferability of Shares
• Common Seal
• Capacity to sue and being sued
• Separate Management
• One Share-One Vote
• Types of Companies
What we will cover
• Definitions
• Formation of company – incorporation
• Registration
• Who’s and who in a company
• Body Corporate and Lifting of Corporate veil
• MoA and AoA
S.1 Whom does the Act applies
• Companies incorporated under this Act or under any previous law;
• Insurance companies, except in so far as the said provisions are inconsistent
with the provisions of the Insurance Act, 1938 or the IRDA Act, 1999;
• Banking companies, except in so far as the said provisions are inconsistent with
the provisions of the Banking Regulation Act, 1949;
• Companies engaged in generation or supply of electricity, except in so far as the
said provisions are inconsistent with the provisions of the Electricity Act, 2003;
• Any other company governed by any special Act in force, except in so far as the
said provisions are inconsistent with the provisions of such special Act; and
• Such body corporate, incorporated by any Act for the time being in force, as the
Central Government may, by notification, specify in this behalf, subject to such
exceptions, modifications or adaptation, as may be specified in the notification.
Types of Companies
• By the nature of its members
• Public, Private or One man company
• By its objectives
• Government Company, Banking Company, Not for profit company (S.8)
• By nature of limitations
• Limited or unlimited
• Limited by shares
• Limited by guarantee
• By its Size (Medium or small scale)
• Companies formed under an Act
• Holding and Subsidiary Companies
• Foreign Company
Some Definitions
• Private company means a company having a minimum paid-up share capital of
one lakh rupees or such higher paid-up share capital as may be prescribed, and
which by its articles restricts the right to transfer its shares and limits the
number of its members to two hundred
• One Person Company means a company which has only one person as a
member
• Public company means a company which is not a private company, and has a
minimum paid-up share capital of five lakh rupees or such higher paid-up
capital, as may be prescribed:
• Provided that a company which is a subsidiary of a company, not being a private
company, shall be deemed to be public company for the purposes of this Act even where
such subsidiary company continues to be a private company in its articles ;
• A Public Limited Company is a company that has limited liability and offers
shares to the general public. Its stock can be acquired by anyone, either
privately through (IPO) initial public offering or via trades on the stock market.
Some Definitions
• Limited Companies
• Company limited by guarantee means a company having the liability
of its members limited by the memorandum to such amount as the
members may respectively undertake to contribute to the assets of
the company in the event of its being wound up;
• Company limited by shares means a company having the liability of
its members limited by the memorandum to the amount, if any,
unpaid on the shares respectively held by them;
• It may be further divided in public companies (public limited companies) and
private companies (private limited companies).
• Unlimited company means a company not having any limit on the
liability of its members;
Some Definitions
• Small company (2-85) means a company, other than a public company,
• paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be
prescribed which shall not be more than five crore rupees; or
• turnover of which as per its last profit and loss account does not exceed two crore rupees or such
higher amount as may be prescribed which shall not be more than twenty crore rupees:
• This definition of a small company is not applicable to the following:
• A public company
• A holding company or a subsidiary company
• A company registered under Section 8
• A company or body corporate that is governed by any Special Act
• Status of a small company may change from year to year depending upon the range of paid-
up share capital and turnover. If a company crosses any of the thresholds provided (either
for paid-up capital or turnover), the benefits that are available during a given year may be
removed in the following year and may be made available again in the subsequent years.
• A small company can be a listed company if it meets the eligibility criteria of the BSE and
the NSE.
Some Definitions
• banking company means a banking company as defined in clause (c) of section
5 of the Banking Regulation Act, 1949;
• According to Sec. 5 of the Banking Regulation Act, 1949, a banking company means the
accepting, for the purpose of lending or investment, of deposits of money from the
public, repayable on demand or otherwise and withdrawn by Cheque, Draft, Order, or
otherwise.
• foreign company means any company incorporated outside India which has a
place of business in India whether by itself or through an agent, physically or
through electronic mode; and conducts any business activity in India in any
other manner.
• Government company means any company in which not less than fifty one per
cent. of the paid-up share capital is held by the Central Government, or by any
State Government or Governments, or partly by the Central Government and
partly by one or more State Governments, and includes a company which is a
subsidiary company of such a Government company;
Some Definitions
• holding company, in relation to one or more other companies, means a company of
which such companies are subsidiary companies;
• associate company, in relation to another company, means a company in which that
other company has a significant influence, but which is not a subsidiary company of
the company having such influence and includes a joint venture company.
• Dormant company: Where a company is formed and registered under this Act for a
future project or to hold an asset or intellectual property and has no significant
accounting transaction, such a company or an inactive company may make an
application to the Registrar in such manner as may be prescribed for obtaining the
status of a dormant company.
• Inactive company: means a company which has not been carrying on any business
or operation, or has not made any significant accounting transaction during the last
two financial years, or has not filed financial statements and annual returns during
the last two financial years
Formation of a Company
Minimum Requirement of a Private Company:
• Minimum 2 Shareholders
• Minimum 2 Directors (The directors and shareholders can be same person)
• Minimum Authorised Share Capital to be Rs. 100,000
• DSC (Digital Signature Certificate) for all the Directors (for applying of DIN)
• DIN (Director Identification Number) for all the Directors
Minimum Requirement of a Public Company:
• Minimum 7 Shareholders
• Minimum 3 Directors (The directors and shareholders can be same person)
• Minimum Authorised Share Capital shall be Rs. 500,000 (INR Five Lac)
• DIN (Director Identification Number) for all the Directors
• DSC (Digital Signature Certificate) for one of the Directors
Formation of a company - stages
• A complex activity involving completion of legal formalities and procedures. It may
have four distinct stages, Promotion; Incorporation; Subscription of capital and
Commencement of Business.
• A promoter is a firm or person who does the preliminary work related to the
formation of a company, including its promotion, incorporation, and flotation, and
solicits people to invest money in the company, usually when it is being formed.
• Promotion stage
• Developing an idea, setting objectives
• Planning
• Investigation and feasibility study
• Market study
• Technical feasibility
• Search for professionals
• Estimating and identifying source of funding
Formation of company –
incorporation
• S.3 A company may be formed for any lawful purpose by—
a. seven or more persons, where the company to be formed is to be a public company;
b. two or more persons, where the company to be formed is to be a private company; or
c. one person, where the company to be formed is to be One Person Company that is to say, a
private company,
• by subscribing their names or his name to a memorandum and complying with the
requirements of this Act in respect of registration:
• A company thus formed may be either a company limited by shares; or limited by
guarantee; or an unlimited company.
• Documents required
• Proof of address no older than three months.
• Latest 3-month bank statement.
• Proof of Identification.
• Directors proof of identification.
• PAN, GST etc.
One Person Company
• Memorandum of One Person Company to indicate the name of the other person,
with his prior written consent, who shall, in the event of the subscriber’s death or
his incapacity to contract become the member of the company
• Written consent of such person to be filed with the Registrar at the time of
incorporation of the One Person Company along with its memorandum and
articles:
• Such other person may withdraw his consent in such manner as may be
prescribed:
• Member of One Person Company may at any time change the name of such
other person by giving notice in such manner as may be prescribed:
• It is a duty of the member of One Person Company to intimate the company the
change, if any, in the name of the other person nominated by him, and the
company to intimate the Registrar
• Provided also that any such change in the name of the person shall not be
deemed to be an alteration of the memorandum.
Formation of companies with charitable objects
• S.8 Companies registered as a limited company for promotion of
commerce, art, science, sports, education, research, social welfare,
religion, charity, protection of environment or any such other object and
• intends to apply its profits or other income in promoting its objects; and
• intends to prohibit the payment of any dividend to its members,
• A company registered under this section shall enjoy all the privileges and
be subject to all the obligations of limited companies.
• A firm may be a member of the company registered under this section.
• A company registered under this section shall not alter the provisions of
its memorandum or articles except with the previous approval of the
Central Government.
Effect of registration
• S.9 From the date of incorporation mentioned in the certificate of
incorporation, such subscribers to the memorandum and all other persons, as
may, from time to time, become members of the company, shall be a body
corporate by the name contained in the memorandum, capable of exercising all
the functions of an incorporated company under this Act and having perpetual
succession and a common seal with power to acquire, hold and dispose of
property, both movable and immovable, tangible and intangible, to contract and
to sue and be sued, by the said name.
• A registered company can exercise all functions of a company incorporated under
the Act. Also, the company has perpetual succession with power to acquire, hold,
and dispose of property of all forms. Also, it can contract, sue and be sued by the
said name.
• After registration, the company must within two months issue each shareholder
with a Share certificate. A share certificate is evidence of each shareholder's title
to their shares. Shareholders can use their certificate as evidence if their name is
deleted from the company's internal Register of Members.
Who’s and who in a company (2013 Act)
• Promoter is a person who is engaged in promoting the formation and incorporation of the
Company. He conceives the idea of setting up the business and took the steps for the formation of
the Company.
• (69) “promoter” means a person—
• (a) who has been named as such in a prospectus or is identified by the company in the annual return referred
to in section 92; or
• (b) who has control over the affairs of the company, directly or in directly whether as a share holder, director
or otherwise; or
• (c) in accordance with whose advice, directions or instructions the Board of Directors of the company is
accustomed to act:
• Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity;
• Shareholder (also stockholder), is a person, company, or institution that owns at least one share
of a company's stock. A shareholder is an owner of a company as determined by the number of
shares they own. A stakeholder does not own part of the company but does have some interest in
the performance of a company
• Directors
• KMPs
Who’s and who in a company (2013 Act)
• Board of Directors or Board, in relation to a company, means the collective body of the directors
of the company;
• Directors are effectively the agents of the company, appointed by the shareholders to manage its
day-to-day affairs. The basic rule is that the directors should act together as a board but typically
the board may also delegate certain powers to individual directors or to a committee of the
board.
• Key Managerial Personnel (KMP) refers to the employees of a company who are vested with the
most important roles and functionalities. They are the first point of contact between the company
and its stakeholders and are responsible for the formulation of strategies and its implementation.
• KMP in relation to a company, means
i. the Chief Executive Officer or the managing director or the manager;
ii. the company secretary;
iii. the whole-time director;
iv. the Chief Financial Officer;
v. such other officer, not more than one level below the directors who is in whole-time employment,
designated as key managerial personnel by the Board; and
vi. such other officer as may be prescribed;
What is a Body Corporate
• Corporate Personality
• The distinct status of a business organization that has complied with law for its recognition as a
legal entity
• The independent legal existence from that of its officers, directors and shareholders
• It encompasses the capacity of a company to have a name of its own, to sue and to be sued, and
to have the right to purchase, sell, lease and mortgage its property in its own name.
• Property cannot be taken away from a company without due process of law
• This is a fiction created by law and enables an organisation of multiple owners to function as a
single identity.
• It also enables company longevity – by having its own distinct personality, it can far outlive its
body of owners.
• This legal fiction is integral to the functioning of companies and is the fundamental basis or
rationale for incorporation.
• Salomon vs. Salomon & Co. Ltd
• Lee vs. Lee Air Farming Limited
• Kondoli Tea Co. Ltd., (1886) ILR 13 Cal. 43
 Salomon vs. Salomon & Co. Ltd (1897)

• Salomon, a sole proprietor, was a boot and shoe manufacturer. Sound business,
surplus
• Incorporated a company named Saloman & Co. Ltd for the purpose of taking
over and carrying on his business.
• Seven subscribers were Saloman, his wife, his daughter and four sons
• Saloman and two of his sons, constituted the Board of Directors of the company.
• The business was transferred to the company for £40000.
• Saloman took 20000 shares of £1 each and secured debentures worth 10,000
creating a charge on the company's assets.
• One share each was given to each remaining member of his family.
• The company went into liquidation within a year.
• Its assets amounting to £6,000 were insufficient to pay the debentures in full
and the ordinary creditors received nothing.
 Salomon vs. Salomon & Co. Ltd (1897)

• The liquidator sought to have the debentures cancelled on the ground that the company
was only an agent of Salomon.
• The unsecured creditors, on their part contended that though the company was
incorporated under the Act, the Salomon & Co. Ltd. had no independent existence and it
was in fact only Salomon who was the sole person behind it, he was the managing director,
the other directors being his sons were under his control.
• Thus, in effect the company was one man show and its existence was contrary to the spirit
and meaning of the Company Law.
• The Salomon and Company Ltd. was incorporated complying with all the formalities which
were necessary to corporate a company having a personality separated from that of its
members and since Salomon was one of its members or share holders he was under no
obligation to meet liabilities of the company.
• The House of Lords refused these arguments on the ground that after incorporation the
Salomon and Co. Ltd. became in law a different person altogether from its members with
its own rights and liabilities.
• So, the House of Lords has made it clear that after incorporation a company is conferred on
a legal entity different from the motives or conduct of its members and promoters.
 Lee vs. Lee Air Farming Limited (1960)

• Judicial Committee of the Privy Council reasserted that a company is a separate legal entity,
so that a director could still be under a contract of employment with the company he solely
owned.
• Lee formed the company to spread fertilisers on farmland from air - top dressing.
• Lee held 2999 of 3000 shares, was the sole director and employed as the chief pilot.
• He was killed in a plane crash.
• Mrs Lee wished to claim damages of 2,430 pounds under the Workers’ Compensation Act
• The company was insured (as required) for worker compensation.
• Court of Appeal of New Zealand said Lee could not be a worker when he was in effect also
the employer. Relationship of master-servant was not created.
• Privy Council advised that Mrs Lee was entitled to compensation, since it was perfectly
possible for Mr Lee to have a contract with the company he owned. The company was a
separate legal person.
• There appears to be no great difficulty in holding that a man acting in one capacity can make
a contract with himself in another capacity.
• The company and the deceased were separate legal entities.
 Kondoli Tea Co. Ltd., (1886) ILR 13 Cal. 43

• A group of people had sold their tea estate to a company that was incorporated
by them itself. They tried to avoid the ad valorem duty stating that they were
themselves the shareholder of the company. Therefore it would be a transfer by
them to themselves in another name.
• The Calcutta High court refused this observation and held that the company is
separate person distinct from member shareholders promoters etc. The duty is to
be paid by the shareholders to the company that itself is a separate legal entity.
• “This is the only thing that I think it necessary for us to say in giving judgment,
namely, that, in my opinion, the Kondoli Tea Company, Limited, is a separate
body; and for the purpose of seeing what their transactions are, I do not think it is
possible to look at the Register of Shareholders to ascertain who the shareholders
were; and, consequently, although the conveying parties here were the
shareholders of the Company, there was just as much a sale and transfer of the
property and a change of ownership as there would have been if the shareholders
had been different persons.
Doctrine of Lifting the Corporate Veil
• Disregarding the corporate personality and looking behind the real person who are in control of
the company.
• Where a fraudulent and dishonest use is made of the legal entity, the individuals concerned will
not be allowed to take shelter behind the corporate personality. In this regards the court will break
through the corporate veil.
• It is a judicial act of imposing liability on otherwise immune corporate officers, Directors and
shareholders for the corporation's wrongful acts.
• A process whereby the corporate is disregarded and the incorporation conferred by statute is
overridden other than the corporate entity an act of the entity.
• Individual hiding behind the corporation is liable to discharge the obligations ignoring the concept
of corporation as a legal entity.
• The concept of corporate entity was evolved to encourage and promote trade and commerce but
not to commit illegalities or to defraud people.
• The corporate veil indisputably can be pierced when the corporate personality is found to be
opposed to justice, convenience and interest of the revenue or workman or against public interest.
• DDA v. Skipper Construction Co. Pvt. Ltd. (96) The Supreme Court referred to the principle of lifting
corporate veil.
Lifting the Veil of Incorporation
• Courts in general consider themselves bound by veil of incorporation
• There is a fictional veil between the company and its members
• In some cases, the Court pierce the corporate veil or will ignore the
corporate veil to reach the person behind the veil or to reveal the true
form and character of the concerned company.
• Rationale behind this is that the law will not allow the corporate form
to be misused or abused. In those circumstances in which the Court
feels that the corporate form is being misused it will rip through the
corporate veil and expose its true character and nature
Lifting the Veil of Incorporation
• The company is equal in law, to natural person. Ordinarily, corporate
personality of a company is to be respected
• Two types of provisions for lifting of the Corporate Veil
• Judicial Provisions include Fraud, Character of Company, Protection of revenue,
Single Economic Entity etc.
• Statutory Provisions include Reduction in membership, mis-description of name,
Fraudulent conduct of business, Failure to refund application money, etc.
• Commission of fraud or improper conduct
• Conduct conflicts with public policy
• Company formed to evade taxes
• Avoidance of welfare legislation by incorporating a new company
• Using it for an unjust and inequitable purpose
• Company commits crime – company is not a citizen
LIC v Escorts Ltd. (1986) 1SCC 264
• This case dealt with the issue of a company as an independent juristic personality and
the lifting of the veil
• A non-resident portfolio investment scheme (erstwhile FERA) allowed non-resident
companies, which were owned by or in which the beneficial interest vested in non-
resident individuals of Indian nationality / origin was at least 60%, to invest in the
shares of Indian companies.
• Investment was allowed to the extent of 1% of the paid-up equity capital of such
Indian companies, and could not exceed a ceiling of 5%.
• Under the scheme, 13 companies, all owned by Caparo Group Limited, invested in
Escorts Limited – an Indian company. Importantly, 60% of the shares of Caparo Group
Limited were held by a trust, whose beneficiaries were Swraj Paul and members of his
family (all non-resident individuals of Indian origin).
• The investment by the 13 Caparo Group companies was challenged on the ground
that it was an attempt at circumventing the prescribed ceiling of investment of 1%
under the Scheme, and that, “One had only to pierce the corporate veil to discover
Mr. Swraj Paul lurking behind.”
LIC v Escorts Ltd. (1986) 1SCC 264
• SC noted the judgment in Salomon, and that it was firmly established that a company once
incorporated, has an independent and legal personality distinct from the individuals who are its
members. It also noted that only in certain exceptional circumstances may the corporate veil be
lifted, the corporate personality ignored and the individual members recognised for who they are.
• SC ruled that in the facts of this case, and only for the purposes of ascertaining the ownership in
the investment, lifting of the veil would be necessary to a limited extent, i.e. to ascertain the
nationality or origin of the shareholders. It was not necessary to ascertain the individual identity
of each of them. Merely because more than 60% of the shares of the foreign investor companies
were held by a trust of which Mr. Swraj Paul and the members of his family were beneficiaries,
could not deny the companies the facility of the scheme on the basis that the permission granted
was illegal. As such, the Court ignored that the identity of the shareholders may be common, thus
recognising that each company was an independent juristic entity, looking only at nationality for
compliance with the requirements of the scheme.
• SC also took the opportunity to set out the basic conditions and principles to be applied and the
various circumstances under which the corporate veil of a company could be pierced, i.e. to cast
responsibility or liability for an act carried out by the company. Such acts would include fraud or
improper conduct, the evasion of a taxing or a beneficent statute or where associated companies
are inextricably connected as to be, in reality, part of one concern and should therefore, be
treated as such.
Cases where the Act itself lifts the
veil
Failure to return application money (Section-39)
• Issue of share by a company - if minimum subscription as stated in the prospectus has not been
received directors personally liable to return the money with interest, in case application money is
not repaid within a prescribed period.
Misrepresentation in prospectus (Section- 34 and 35)
• Every director, promoter and every other person who authorize such issue of prospectus incurs
liability towards those who subscribed for shares on the faith of untrue statement.
Fraudulent Conduct (Section 339):
• While winding-up if any intent to defraud creditors is visible, those who are knowingly parties to
such conduct of business may, if the Tribunal thinks it proper so to do, be made personally liable
without any limitation as to liability for all or any debts or other liabilities of the company.
Criminal Liability for Misstatements in Prospectus
• If any default is made in complying with the requirements to this section, the company and every
officer who is in defaults shall be liable to a penalty of one thousand rupees for every day during
which the default continues but not exceeding one lakh rupees.
Officer in default
• Section 2(60) of the Companies Act defines 'Officer who is in default' and it mentions officers
such as whole-time director, KMP, directors, etc. who shall be liable to any penalty or
punishment in case of default committed by the company.
• officer who is in default, for the purpose of any provision in this Act which enacts that an
officer of the company who is in default shall be liable to any penalty or punishment by way of
imprisonment, fine or otherwise, means any of the following officers of a company, namely:—
• whole-time director;
• key managerial personnel;
• where there is no key managerial personnel, such director or directors as specified by the Board in this
behalf and who has or have given his or their consent in writing to the Board to such specification, or all
the directors, if no director is so specified;
• any person who, under the immediate authority of the Board or any key managerial personnel, is charged
with any responsibility including maintenance, filing or distribution of accounts or records, authorises,
actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;
• any person in accordance with whose advice, directions or instructions the Board of Directors of the
company is accustomed to act, other than a person who gives advice to the Board in a professional
capacity;
Memorandum and Article of a
Company
• Memorandum of association is the charter of the company and defines the scope
of its activities. An article of association of the company is a document which
regulates the internal management of the company.
• Memorandum of association defines the relation of the company with the rights
of the members of the company interest and also establishes the relationship of
the company with the members.
• As per Section 2(56) of the Companies Act, 2013 “memorandum” means the
memorandum of association of a company as originally framed or as altered from
time to time in pursuance of any previous company law or of this Act.
• “articles” means the articles of association of a company as originally framed or
as altered from time to time or applied in pursuance of any previous company
law or of this Act;
• Vision and Mission
Memorandum of a Company
• Name Clause: Name of the company with the last word “Limited” in the case
of a public limited company, or the last words “Private Limited” in the case of
a private limited company. 4(1)(a)
• Name not to be identical with or resemble too nearly to the name of an existing
company; also not offensive or undesirable
• name not to give any impression of connection or patronage with the Central
Government, etc., unless the previous approval is there
• To reserve a name application with fee submitted to the registrar indicating the name
of the proposed company; or the name to which the company proposes to change its
name
• Registrar may reserve the name for 60days from the date of the application.
• Situation (Registered office) Clause: The State in which the registered office of
the company is to be situated. 4(1)(b)
• Object Clause: Objects for which the company is proposed to be incorporated
and any matter considered necessary in furtherance thereof. 4(1)(c)
• Doctrine of Ultra Vires
Name stated in the memorandum
Name stated in the memorandum shall not
• be identical with or resemble too nearly to the name of an existing
company;
• be such that its use by the company will constitute an offence under any
law; or is undesirable in the opinion of the Central Government.

• A company shall not be registered with a name which contains any word or
expression which is likely to give the impression that the company is in any
way connected with, or having the patronage of, the Central Government,
etc. or such word or expression, as prescribed in the Companies
(Incorporation) Rules, 2014, unless the previous approval of the Central
Government has been obtained for the use of any such word or expression.
Reservation of name
• A person may make an application along with the fee as provided in
the Companies (Registration offices and fees) Rules, 2014 to the
registrar for the reservation of a name set out in the application as –
• the name of the proposed company; or
• the name to which the company proposes to change its name

• The Registrar may, on the basis of information and documents

furnished along with the application, reserve the name for a period of
sixty days from the date of the application.
Object Clause
This clause states the objective with which the company is formed. The
objectives can be further divided into the following 3 subcategories:

• Main Objective: It states the main business of the company

• Incidental Objective: These are the objects ancillary to the attainment
of main objects of the company
• Other objectives: Any other objects which the company may pursue
and are not covered in above (a) and (b)
Memorandum of a Company
• Liability Clause 4(1)(d) : Liability of members whether limited or
unlimited, and also state,
• company limited by shares– liability limited to the amount unpaid, if any, on
the shares held by them; and
• company limited by guarantee
• amount up to which each member undertakes to contribute to the assets of
the company in the event of its being wound-up while he is a member or
within one year after he ceases to be a member, for payment of the debts and
liabilities of the company or of such debts and liabilities as may have been
contracted before he ceases to be a member, as the case may be; and
• to the costs, charges and expenses of winding-up and for adjustment of the
rights of the contributories among themselves;
• In the case of One Person Company, the name of the person who, in
the event of death of the subscriber, shall become the member of the
company. 4(1)(f)
Memorandum of a Company
• Capital Clause: 4(1)(e)
• the amount of share capital with which the company is to be
registered and the division thereof into shares of a fixed amount and
the number of shares which the subscribers to the memorandum
agree to subscribe which shall not be less than one share; and
• the number of shares each subscriber to the memorandum intends to
take, indicated opposite his name;
• Capital could be nominal, authorized or registered
Alteration of Memorandum of Association
• Convey to the Board of Directors the proposal to make such an
alteration. As per S. 173, BoD must be intimated through a notice at
least seven days before.
• Company can change its name at any time by passing a special
resolution and by obtaining the approval of the Central Government.
• Change not allowed if the company has defaulted in filing its annual returns or
Financial Statements or any other document due for filing with Registrar.
• A special resolution must be passed for change of object clause, details
made public. Registrar must certify within 30 days of passing the
resolution
• Alteration of the Registered Office Clause within local limits, pass Board
resolution and special resolution. If outside the state, approval of
government required
• No employee to be retrenched as a result of the transfer of the registered office
Altering Share Capital Clause
• Sections 13 and 61 deal with the alteration of the share capital clause in a
MoA, provided the company’s AOA permits it. Such an alteration may include
the following;
• Alteration of the Capital Clause - Increase the authorized share capital of the
company;
• Increase or decrease the amount of each share;
• Convert its fully paid-up shares into stock or vice versa,
• Consolidation of existing shares into shares of larger amounts
• An increase of its share capital by issue of new shares.
• Cancellation of unissued shares.
• Alteration of the Liability Clause
• The alteration of the Liability Clause restricts the liability of the Directors. The liability
clause can be unlimited by passing a special resolution which should be filed with the
Registrar within a period of 30 days.
Documents required for alteration of
Memorandum of Association
• To alter any clause in a MoA, following documents are required to be
sent along with the application filed under Section 13 of the Act;
• Copy of the MoA along with the proposed changes;
• A detailed report of the proceedings of the board and general
meetings in which the resolution allowing such an alteration was
passed;
• A certified copy of the resolution passed by the Board, and
• The list of creditors and debenture holders, along with their
names, addresses, debts, claims, or other liabilities due to them.
Articles of a company
• As per Section 2(5) of the Companies Act,2013 “articles” means the
articles of association of a company as originally framed or as altered
from time to time or applied in pursuance of any previous company
law or of this Act.
• Section 5 of the Companies Act,2013 deals with AOA.
• The articles of a company shall contain the regulations for
management of the company.
• The articles shall also contain such matters, as may be prescribed.
• It shall not prevent a company from including such additional matters
in its articles as may be considered necessary for its management.
Alteration of articles of association
• Section 14 of the Companies Act, 2013 contains the provisions for the
alteration of the Articles of Association of a company.
• A company may modify, delete or add any article by convening a
meeting of the Board of Directors.
• The company should call for a general meeting or an extraordinary
general meeting (EGM). The company has to give at least 21 days
notice
• The amendment or the alteration to AOA should conform to the
provisions of the Companies Act, 2013.
• The alteration of the articles should not violate the memorandum of
association of the company.
Act to override memorandum,
articles, etc.
S.6 Save as otherwise expressly provided in this Act—
a. the provisions of this Act shall have effect notwithstanding anything to the
contrary contained in the memorandum or articles of a company, or in any
agreement executed by it, or in any resolution passed by the company in
general meeting or by its Board of Directors, whether the same be registered,
executed or passed, as the case may be, before or after the commencement of
this Act; and
b. any provision contained in the memorandum, articles, agreement or resolution
shall, to the extent to which it is repugnant to the provisions of this Act,
become or be void, as the case may be.

• A company registered under this section may convert itself into company of any
other kind only after complying with such conditions as may be prescribed.
• Characteristics of Companies
• Doctrine of Lifting of Corporate Veil
• Formation of Companies
• Memorandum of Association, Articles of Association, Registration
• Doctrine of Constructive Notice
• Doctrine of Ultra Vires
• Doctrines of Indoor Management
• Directors of Company
• Share capital, buy back
• Company Meetings
• Resolution
• Winding Up of a Company
• IBC, 2016