Dhrumil
(CS Professtion)
24 March 2008
SECRETARIAL PRACTICE
I. Procedure for alteration of articles
1. Drafting alterations
Draft the proposed alterations in three parts:
(a) Existing provision(s) in the articles;
(b) Proposed alteration(s) to the articles; and
(c) Reasons for the proposed alteration(s).
A brief note may be prepared explaining the background and reasons for the proposed alterations to be included in the agenda for the Board meeting.
Keep in view the guidelines for drafting the articles and the provisions of the Act, which require specific regulations to be included in the articles.
Ensure that as a result of an amendment in the articles, no member of the company is required to take or subscribe for more shares than the number held by him at the date of the alteration or that increases his liability, to contribute to the share capital of the company or to otherwise pay more money to the company, except in the specified cases [S. 38].
An alteration inconsistent with the order made by the CLB, under section 397 or 398 shall be ineffective, unless the leave of the CLB has been obtained [S. 404(1)].
In the case of a company, to which a license has been granted under section 25, any alteration in the articles shall be subject to the previous approval of the Central Government (Regional Director).
2. Board resolution
Convene a Board meeting to pass the following resolutions:
(a) A resolution approving the alterations and recommending the proposal for consideration and approval of the members at a general meeting;
(b) A resolution approving the draft of the special resolution to be passed at the general meeting. If the said special resolution is to be passed at an extraordinary general meeting, the date, time and place thereof should be fixed at the Board meeting and the secretary/director should be authorised to issue the notice of the meeting.
A specimen resolution is given below.
Specimen Board resolution for alteration of articles
RESOLVED THAT, subject to the approval of the Company by a special resolution to be passed at a general meeting under section 31 of the Companies Act, 1956 and other required approvals, the articles of association of the Company be altered in the manner set out below:
(a) By inserting in the articles the following new articles [here state the articles to be inserted]:
(b) By deleting in article [number] the words ['words to be deleted'];
(c) By substituting for the existing article [number] the following article: [here state the article to be inserted]; and
(d) By deleting in article [number] the words ['words to be deleted'] and substituting therefor the words ['words to be inserted'].
If the company requires any approvals or permissions for alteration of the articles, the resolution should state that it is subject to such approvals/permissions, such as financial institutions, banks, Stock Exchange, Securities and Exchange Board of India, etc., as may be necessary. It is advisable to obtain the previous approval of the concerned authority to the proposed alteration.
If a proposed alteration requires the leave (permission) of the CLB granting approval under section 404(1) of the Act, the resolution should state that it is subject to such leave.
A specimen resolution is given below.
3. Approval of the Regional Director
A company, which has been granted a license under section 25 of the Act, must submit a draft of the proposed alterations to the Regional Director before convening a general meeting for passing a special resolution to approve the alterations.
4. Leave of CLB
If a proposed alteration requires the leave of the CLB granting approval under section 404(1) of the Act, the company should make an application to the Principal Bench of the CLB for an order granting leave.
5. Filing of order granting leave
File a copy of the order of the CLB granting leave under section 404(1) to alter the articles as an attachment to e-Form No. 21 prescribed under the Companies (Central Government's) General Rules & Forms, 1956, electronically with the Registrar within 30 days of receipt of the order and simultaneously file a certified copy of the order in physical form.
6. Notice of general meeting
Send out the notice of the general meeting together with the explanatory statement to the members, in accordance with the provisions of the Act and the articles of the company.
Ensure that the explanatory statement contains the three-part statement and the note mentioned above. The new set of regulations proposed to be adopted should form part of the special resolution, and the explanatory statement to be annexed to the notice of the general meeting under section 173(2) of the Act should set out all the material facts concerning the proposed alterations in the existing articles.
Specimen Special resolution for alteration of articles of association
1. To adopt new articles
RESOLVED THAT the regulations contained in Annex I to the notice of the meeting be and the same are approved and adopted as the articles of association of the Company in substitution for and to the exclusion of all existing articles thereof.
2. To amend articles of association
RESOLVED THAT, subject to such approvals as may be required, the articles of association of the Company be altered in the manner set out below:
(a) By inserting in the articles the following new articles [here state the article to be inserted]:
(b) By deleting in article [number] the words ['words to be deleted'];
(c) By substituting for the existing article [number] the following article: [here state the article to be inserted]; and
(d) By deleting in article [number] the words ['words to be deleted'] and substituting therefor the words ['words to be inserted'].
7. Intimation to the Stock Exchange
In the case of a listed company send to all the Stock Exchanges on which the securities of the company are listed
(a) three copies of the notice of the general meeting;
(b) six copies (one of them to be a certified copy) of the special resolution passed for altering the articles immediately after the meeting.
8. Filing of special resolutions
After the special resolution has been passed at the general meeting, e-Form 23 should be filed electronically with the Registrar within 30 days of the general meeting alongwith the following attachments:
(a) A true copy of the special resolution;
(b) True copies of the explanatory statement [S. 192 of the Act];
(c) A copy of the articles as altered;
(d) A copy of the order of the CLB granting leave under section 404(1) to alter the articles, where applicable.
9. Noting amendment in articles
Note the alteration in every copy of the articles, whether the alteration has been made by the company of its own motion or by the CLB [S. 40]
Dear shraya
i have paste cheklist for your refrence, but formate here might be unreadable so if you want then i ll mail
Dhrumil Shah
dhrumil08@gmail.com
