Skip to content

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

Nirmaan Welfare Limited is a company limited by guarantee without share capital. Its members pass a special resolution altering the memorandum so that a financier, who is not a member, gets a right to share in the company's divisible profits. What is the legal position?

The alteration is void. In a company limited by guarantee and having no share capital, any memorandum alteration giving a person a right to participate in divisible profits otherwise than as a member is void, regardless of registration, approvals or consent.

  1. AThe alteration is valid if registered with the Registrar
  2. BThe alteration is valid if the Central Government approves it
  3. CThe alteration is valid if all members consent in writing
  4. DThe alteration is voidCorrect

Explanation

For a guarantee company without share capital, an alteration of the memorandum purporting to give any person a right to participate in divisible profits otherwise than as a member is void. Registration, government approval or member consent does not cure it.

Did you get it right without looking?

One question tells you little. A timed set on Memorandum and Articles of Association and its Alteration shows your real accuracy, how long you take and where you lose marks.

Practise Memorandum and Articles of Association and its AlterationFree diagnostic mock

More Memorandum and Articles of Association and its Alteration questions