Company Registration

Section 13 of Companies Act, 2013: Explained

calendar31 Jan, 2022
timeReading Time: 3 Minutes
Section 13 of Companies Act

A Memorandum of association (broadly known as MoA) refers to a charter document that oversees the interplay between the organization and the outsiders. It lays down the purposes, goals, and other material aspects of the company. Therefore, MoA is a vital document as it underpins the interplay of the organization with the interest of its members. Once drafted, the MoA can be altered on various grounds, as mentioned under Section 13 of the Companies Act, 2013. The write-up shall provide a detailed briefing on the same section and let you understand its scope.

A brief overview on Section 13 of Companies Act, 2013

Section 13 of Companies Act, 2013[1] has laid down the conditions relating to the alteration of the memorandum.

As per this section,

  • A company may via a special resolution passed in a board meeting and post complying with the procedure prescribed in this section, alter the underlying provisions of its memorandum.
  • Any changes made to the company’s name shall be subjected to the norms of sub-section (2) & (3) of section 4 & shall remain ineffective except with the consent of the Central Gov in writing:

Provided that such consent shall be imperative where the only change in the company’s name is the removal therefrom, or addition thereto, of the term “Private”, consequent on the conversion to one companies’ class to another w.r.t the provisions of this Act.

  • When any modification is made in the company’s name as per sub-section (2), the RoC shall record the new name in the register of companies, and strike off the old name and grant a new incorporation certificate with the new name, and change in the name should come to effect only after granting of such certification.
  • The alteration of the memorandum w.r.t the registered business place from one state to another shall remain ineffective unless it is authorized by the Central Gov on an application in such form and way as may be provided.
  • The Central Gov shall not consider the application under sub-section (4) within 60 days and before issuing its order may satisfy itself that such subject matter has the approval of the creditors, debenture –holders & other individual connected with the company or that the adequate norms have been made either for the due discharge of loans and other financial obligations or that sufficient security has been facilitated for such discharge.
  • Same as mentioned in section 64, a company shall file with the RoC the following documents concerning any alteration of memorandum.

(a) the special resolution under sub-section (1);

(b) the consent of the Central Gov under sub-section (2) if the alteration entails any change in the company’s name.

  • Where such subject matter results in the transfer of the company’s registered office from one state to another one, a certified copy of the order granted by the Central Gov shall be filed with the RoC of each of the States within such timeline and in such a way as may be provided, who shall register the same, & the RoC of the State where the said the office is being shifted to, shall grant a new incorporation certificate reflecting the alteration
  • A company which has procured public funding via the prospectus and still has any unused fund out of the fund so raised shall not alter its object for which it procures the funding via prospectus unless a special resolution is passed and-

(i) the particulars, as may be prescribed, w.r.t such resolution shall also be shared publically via newspaper (one in English & one in vernacular language) which is active at the place where the company’s office is situated and shall also be placed on the company’s web-portal, if any, reflecting therein the justification for such change;

(ii) the unsatisfied shareholders shall be provided an opportunity to exist by the company’s shareholders and promoters according to norms to be mentioned by the Securities and Exchange Board.

  • The Registrar shall register any such subject matter i.e. alteration of the memorandum w.r.t company, and certify the registration within 30 days from the filing date of the special resolution in view of clause (a) of sub-section (6) of this section.
  • No alternation shall come to effect until it has been registered as per the provisions of this section.
  • Any alteration of the MOA, in the case of a company lacking a share capital and limited by guarantee, purporting to give any individual a right to have a fair share of divisible profits otherwise than as a member, shall be void.

Conclusion

Memorandum of Association serves as a company’s charter document. It encloses several clauses such as name clause, objective clause, registered office clause, liability clause, etc. These clauses are amendable as per the norms mentioned. Section 13 of Companies Act, 2013 plays a vital role in this regard as it sets out provisions for the same. Let us know if you wish to get familiar with more facts about the same.

Read our Article:How to Incorporate a Company in India: Complete Guide

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