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

Kaveri Foods Ltd, a listed public company, raised money through a prospectus for setting up a plant. Part of the money remains unutilised. The company now wants to change the objects for which the money was raised. Which course is consistent with section 13(8)?

The company must pass a special resolution, publish the prescribed details with justification in one English and one vernacular newspaper and on its website, and give dissenting shareholders an exit opportunity. A bare special resolution is not enough where prospectus money is unutilised.

  1. APass a special resolution, publish prescribed details in an English and a vernacular newspaper and on its website, and give dissenting shareholders an exit opportunityCorrect
  2. BPass an ordinary resolution and inform the Registrar within 30 days
  3. CObtain Central Government approval alone, with no shareholder resolution
  4. DPass a special resolution only, since no publication is required

Explanation

Section 13(8) bars a change of objects while prospectus money remains unutilised unless a special resolution is passed. The prescribed details must be published in one English and one vernacular newspaper at the registered office place and on the website, with the justification. Dissenting shareholders must be given an exit opportunity. A special resolution alone is insufficient.

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