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

Mehta Agro Ltd, a public company, passes a special resolution altering its articles. Which statement reflects the effect of such an alteration once registered under section 14?

Once registered, the alteration is valid as if it were originally in the articles, subject to the Act. Section 14(3) gives it this effect, so it binds all members and not merely those who voted for it.

  1. AThe altered article is valid as if it were originally in the articles, subject to the provisions of the ActCorrect
  2. BThe alteration applies only to members who voted in favour
  3. CThe alteration is valid only if it is also noted in the memorandum
  4. DThe alteration has effect from the date of the special resolution, whether or not registered

Explanation

Section 14(3) states that an alteration of the articles registered under sub-section (2) is valid, subject to the Act, as if it were originally in the articles. It binds all members, not only those who voted for it. The alteration is effective on registration, not on the date of the resolution, so the last option is wrong.

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