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CS Executive · Company Law and Practice

Memorandum and Articles of Association and Their Alteration

The memorandum states a company's constitution and its relationship with the outside world. The articles hold the rules for managing it internally. Both can be altered, mostly by special resolution, but each alteration has conditions, filings and approvals. Answer by stating the section, applying it to the facts, and concluding.

What this chapter covers

This chapter covers the two constitutional documents of a company. The memorandum of association sets out the company's basic terms, such as name, registered office, objects and capital. The articles of association contain the regulations for management of the company (section 5(1)). You also study the doctrines of ultra vires and constructive notice, which decide what happens when someone deals with a company outside its powers or against its documents.

The second half of the chapter is about change. Section 13 deals with altering the memorandum. Section 14 deals with altering the articles. Section 15 requires every alteration to be noted in every copy of the memorandum or articles. Section 64 applies when the change is to share capital. Section 5 adds entrenchment provisions, which make some articles harder to change than a special resolution would.

This chapter links to almost every other part of Paper 2. Incorporation, conversion of private and public companies, share capital, meetings and resolutions all depend on what these documents say and how they can be changed. If you understand who can change what, by which resolution, with whose approval and within what time, many later chapters become easier.

Alteration questions are favourites in a written paper because they are rule-heavy and fit the ICSI answer pattern: provision, facts, conclusion. The same few sections give you short notes, differences and case-style problems. Students lose marks by mixing up the approvals for different alterations, such as name change, shifting the registered office to another State, and conversion of a public company into a private one. Learn the chapter as a table of conditions in your head and you can score reliably.

Memorandum and Articles of Association and its Alteration: topics in the order to study them

  1. 1Memorandum of Association: Meaning and ContentsStart here because everything else in the chapter alters or relies on this document and its clauses.
  2. 2Articles of Association: Meaning and ContentsStudy it next so you can compare the two documents clause by clause, and see the role of model articles under section 5.
  3. 3Doctrine of Ultra Vires and Constructive NoticeOnce you know both documents, you can see how outsiders are affected by what they say and by their public filing.
  4. 4Alteration of Memorandum of AssociationLearn this after the contents of the memorandum, because each alteration depends on the clause being changed.
  5. 5Alteration of Articles of AssociationGo to this after the memorandum alteration so you can contrast the procedures, including conversion between private and public company.
  6. 6Entrenchment Provisions and Filing RequirementsFinish with entrenchment and filings, since they add exceptions and time limits on top of the basic alteration rules.

How to prepare Memorandum and Articles of Association and its Alteration

Prepare this chapter by building a comparison of the two documents and then a checklist for each type of alteration. Read the sections themselves, not only notes.

  1. Read sections 5, 13, 14, 15 and 64 in the Act and underline the resolution type, approval authority, time limit and consequence in each.
  2. Make a two-column comparison of memorandum and articles: purpose, contents, who can change them, and limits on change.
  3. Build an alteration checklist for the memorandum: general change by special resolution, name change needing written Central Government approval, shifting the registered office from one State to another needing Central Government approval, and change of objects after raising money through a prospectus.
  4. Build a second checklist for the articles: special resolution, conversion of a public company into a private company needing Central Government approval, filing with the Registrar within fifteen days, and the entrenchment rules.
  5. Study ultra vires and constructive notice together with their practical effect on a person dealing with the company, and practise short problems on them.
  6. Write three or four answers in full ICSI style. State the provision, apply it to the facts, and conclude with the section cited.
  7. On the last days, revise only the checklists and the time limits, penalties and approvals that students tend to mix up.

Common mistakes in Memorandum and Articles of Association and its Alteration

  • Saying every alteration of the memorandum needs Central Government approval.

    Fix: Remember that the general rule is a special resolution. Approval is needed only for specific changes such as a name change or shifting the registered office to another State.

  • Confusing the time limits of sections 14, 13 and 64.

    Fix: Tie each number to its section: articles filing is fifteen days, share capital notice and objects registration are thirty days, and registered office shift disposal is sixty days.

  • Treating entrenchment as the same as an ordinary special resolution requirement.

    Fix: State that entrenchment means conditions more restrictive than a special resolution, and that the way it is inserted differs for private and public companies.

  • Forgetting that an alteration has no effect until registered or completed in the manner the section requires.

    Fix: End every alteration answer with the filing, registration or fresh certificate step, and say when the change takes effect.

  • Writing about conversion of a public company into a private company using the old Tribunal route.

    Fix: Use the text of section 14 as it now stands: such an alteration is not valid unless approved by an order of the Central Government.

  • Writing theory on ultra vires and constructive notice without applying it to the facts.

    Fix: Identify who dealt with the company, what the documents said, and whether the outsider is treated as knowing it. Then state the result.

Last-day revision: Memorandum and Articles of Association and its Alteration

  • Articles contain the regulations for management of the company (section 5(1)).
  • A company may adopt all or any of the model articles; where registered articles do not exclude them, model article regulations apply so far as applicable.
  • Memorandum is altered by special resolution and the procedure in section 13, save as provided in section 61.
  • A change of name needs written Central Government approval, except where only the word 'Private' is added or deleted on conversion.
  • Name change takes effect only when the Registrar issues a fresh certificate of incorporation.
  • Shifting the registered office from one State to another needs Central Government approval, which is to be disposed of within sixty days.
  • If money raised through prospectus is unutilised, a change of objects needs a special resolution, newspaper publication and an exit opportunity for dissenting shareholders.
  • The Registrar registers an alteration of objects and certifies it within thirty days of filing the special resolution; no alteration has effect until registered.
  • Articles are altered by special resolution, subject to the Act and the memorandum conditions.
  • Converting a public company into a private company is not valid without Central Government approval.
  • Alteration of articles must be filed with the Registrar within fifteen days with a printed copy of the altered articles.
  • Entrenchment: on formation, or by amendment agreed by all members in a private company and by special resolution in a public company; notice goes to the Registrar.
  • Section 15 penalty: ₹1,000 for every copy issued without the alteration noted; share capital alteration notice under section 64 is due within thirty days.

Memorandum and Articles of Association and its Alteration practice questions

Memorandum and Articles of Association and its Alteration in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Memorandum and Articles of Association and its Alteration: frequently asked questions

Is alteration of articles always by special resolution?

Yes, section 14 provides that a company may alter its articles by special resolution, subject to the Act and any conditions in its memorandum. Conversion of a public company into a private company also needs Central Government approval. Entrenched provisions may need a stricter process.

What is the time limit for filing altered articles?

Under section 14(2), the alteration, with a copy of the Central Government order where one is needed, must be filed with the Registrar within fifteen days along with a printed copy of the altered articles. The Registrar registers it. Once registered, it is valid as if originally in the articles.

When does a change of name take effect?

A name change needs the written approval of the Central Government, except where only the word 'Private' is added or deleted on conversion. It is complete and effective only when the Registrar issues a fresh certificate of incorporation with the new name.

What does section 15 require?

Every alteration made in the memorandum or articles must be noted in every copy. If the company defaults, the company and every officer in default are liable to a penalty of ₹1,000 for every copy issued without the alteration.

Is this chapter important for the written exam?

Yes. It has clear rules, conditions and time limits that suit short notes, comparisons and problem answers. Practise writing the provision, the application and the conclusion for each type of alteration.