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

Sundaram Metals Ltd, a public company, passes a special resolution to alter its articles so as to convert itself into a private company. As per section 14(1), what is the position of this alteration?

The alteration is not valid unless approved by an order of the Central Government. Section 14(1) proviso makes conversion of a public company into a private company ineffective without that approval, so a special resolution alone is insufficient.

  1. AIt is valid once the special resolution is passed
  2. BIt is valid once filed with the Registrar within fifteen days
  3. CIt is not valid unless approved by an order of the Central GovernmentCorrect
  4. DIt is valid if the shareholders approve it by ordinary resolution afterwards

Explanation

The second proviso to section 14(1) says an alteration having the effect of converting a public company into a private company is not valid unless approved by an order of the Central Government on an application in the prescribed form and manner. A special resolution alone is therefore insufficient, and filing with the Registrar does not cure the lack of approval.

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