Changes in Articles of Assosiation in a Public Company

Dear Friends,
let us take an example to understand the concepts as : -
Suppose, X Company Ltd. is a public limited company having its object clauses like the following:
Main object:
(a) Manufacturing, branding, selling, etc., cigarettes and other tobacco products.
(b) Purchasing all materials needed to manufacture, brand, patent of the above products and all assets including plants and machineries needed.
Ancillary objects:
(a) Enter into any contracts, lease agreement etc., for the purpose of the main objects.
(b) Manufacture, sale and otherwise disposal of any by-products.
Other objects:
(a) Manufacturing consumable foodstuffs and selling the same.
(b) Doing any other business that the company deems it profitable and beneficial to the company.
(i) Directors of the Board of the said company ask for your advice on the proposal of starting Hotel business at Bangalore. Give a detailed advice to the company.
(ii) Suppose any change in the object clause is necessary, Can the company change and how?
(iii) How can the company change its name?

Issues involved are: -
1 If Directors of the Board need advice on the proposal of starting new business at a place. What would be the procedure?
2. Suppose any change in the object clause is necessary, Can the company change and how?
3. How can the company change its name?

Discussion: -

For issue no 1;
My detailed advice to the directors of board of X Company Ltd is as follows.
As, Other objects of the company include manufacturing consumable foodstuffs and selling the same and doing any other business that the company deems it profitable and beneficial to the company so if ‘X’ Company Ltd. want to start a hotel business then it has make changes in the main object by the procedure is given below.: -
a) The company has to call a board of meeting decide about the change and in that meeting special resolution has to be passed for suitably altering the memorandum of association.
b) As, ‘X’ and Company is a public Ltd. Company so it has to send copies of notice to all its shareholders with respect to the amendment.
c) It has to file the special resolution with explanatory statement with concerned registrar of companies.
d) To publish a general notice at least once daily newspaper, Not less than 1 month before filing the petition.
e) Forward promptly to the stock exchange with which the company is enlisted 3 copies of the general notice published in the newspaper.
f) A petition has to be filed before the Company Law Board in form No. 1 for confirming the change as prescribed in the regulation 14 (1) & (5) of the CLB regulations 1991.
g) Then, the copy of the petition has to serve to the concerned registrar of companies.
h) When the company gets the receipt of the order of Company Law Board then company have to give notice of the receipt of order to the concerned registrar of companies in form No 21.
i) To altered memorandum of association and requisite fee has to be paid within 3 months from the date of order.
j) At last the company has to make necessary changes in every copy of the memorandum of association, letters heads, vouchers, registers, office papers etc.

For issue no 2;

By Section 17 of the companies act, 1956 provisions contained in the memorandum in respect of the two matters i.e. (i) the place of its office its objects and (ii) its objects, may be altered so far it may be necessary to enable the company-
i. To carry on its business more economically or more efficiently;
ii. To attain its main purpose by new or improved means;
iii. To enlarge or change the local area of its operations;
iv. To carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company;
v. To restrict or abandon any part of the undertaking or any of the undertaking of the company; or
vi. Amalgamate with any company or body or persons.
The procedure of alteration of object clause is similar as discussed in issue 1 of this problem.

For issue no 3;

Provision is given in section 21 of the company act, 1956 regarding changing the name of a company at any time in the course of its business. When name is changed either in pursuance of section 21 or section 22, the new name must be notified to the registrar who will enter it in his register and issue a fresh certificate of incorporation to meet the circumstances of the case and also make the necessary alteration in the memorandum of association of the company concerned.
a) It must be noted that the change of name becomes and effective only on the issue of the fresh certificate by the registrar [section 23 (1) and (2)].
b) But a change of the name so effected will not affect any rights or obligation of the company not render any legal proceeding by or affect any rights or obligation of the company no render any legal proceeding by or against the company defective in any way and legal proceedings which might have been continued or commenced by or against the company in its former name may be continued by its new name [section 23 (3)]
c) The company has to obtain the assent of ¾th of the members present at a general meeting summoned for the purpose of changing of its name [Sec. 565 (1), proviso (vi) read with Sec. 572]
d) Then company has to apply to the central Government for approving the change in name.
e) After which company has to make an application to the central Government in the form of a letter on a plain paper giving all the relevant details. There is no prescribed form for this.
f) Then the requisite application fee has to be paid by way of treasury challan or demand draft.
g) Then a copy of the application along with copies of other documents attached to it shall be send to the concerned registrar of the companies for information.
h) On receipt of the approval from the central Government carry on the registration requirements of the company under Sec. 567 or 568.No such approval is, however necessary where the only change in the name is the addition thereto or, as the case may be, the deletion there from, of the word ‘private’ consequent on the conversion of a public company into a private company.