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CS Executive · Company Law and Practice · Memorandum and Articles of Association and its Alteration

Bharat Agro Ltd raised funds through a prospectus for setting up a cold-storage unit and still holds an unutilised part of the money. It now wishes to change its objects. Which combination of requirements applies under the Act?

The company needs a special resolution, publication of prescribed details with justification in one English and one vernacular newspaper at the registered office place, display on its website if any, and an exit opportunity for dissenting shareholders offered by promoters and controlling shareholders as per SEBI regulations.

  1. AAn ordinary resolution and an intimation to the stock exchange only
  2. BA special resolution, newspaper publication (one English and one vernacular) with justification, placement on the company's website if any, and an exit opportunity for dissenting shareholdersCorrect
  3. CA special resolution and Registrar approval within 60 days, with no exit opportunity
  4. DA board resolution alone, since the objects clause is not part of the prospectus

Explanation

Section 13(8) bars a company with unutilised prospectus money from changing the objects for which it was raised unless a special resolution is passed, prescribed details are published in an English and a vernacular newspaper and placed on the website, with justification, and dissenting shareholders are given an exit opportunity by promoters and controlling shareholders per SEBI regulations.

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