To what extent may a company alter the objects clause of its memorandum of association?

 A company has statutory power to alter the objects clause of its memorandum.
 Under Section 8 (1) of the Companies Act a company may special resolution alter its objects clause.
 A copy of the resolution must be delivered to the registrar for registration within 30 days thereof. Whereupon the alteration becomes legally effective.

However, under Section 8 (1) of the Act, a company can only alter the objects clause so far as may be necessary to enable it::
– Carry on its business more economically or more efficiently.
– Attain its main purpose new or improved means.
– Enlarge or change the local area of its operations
– Restrict or abandon any of the objects specified in the memorandum
– Sell or dispose off the whole or any part of its undertaking
– Amalgamate with any other company or body of persons.

– Carry on some other business which under existing circumstances may conveniently or advantageously be combined with the business of the company.
Under Section 8 (2) of the Act a proposed alteration of the objects clause may be objected to by:

Holders of not less than 15% in nominal value of the company‟s issued capital
 Holders of not less than 15% of any class of shares of the company
 Holders of not less than 15% of the company‟s debentures entitling them to object
 Not less than 15% of the company‟s members.

Those objecting must be persons who did not consent or vote in favour of the alteration. The court may:
 Make an order cancelling or confirming the alteration either wholly or in part and on such terms and conditions as it deems fit
 Adjourn the proceedings for arrangements to be made to facilitate the purchase of the interests of dissentient members.

(Visited 114 times, 1 visits today)
Share this on:

Leave a Reply

Your email address will not be published. Required fields are marked *