Notes On Alteration Of Articles Of Association:

          Section 31 of the Companies Act 1936 provides that subject to the provision of the Act and the conditions contained in the memorandum, a company may pass resolution to alter its articles. However, section 30 (1) of the Companies Act 1956 restricts a Public Company to get itself converted into Private Company by altering its Articles of Association.

A. Alteration of Article under the direction of the Central Government:

          Under the Companies (Amendment) Act 1988, the central government may direct a company to alter its articles in the following cases:

  1. Where the central government appoints a person as director and an additional director. Under section 408 (1) C (2) to supervise the operation and mismanagement of the company.
  2. The company cannot alter its article without the approval of the central government, if the alteration is related to appointment and reappointment of the managing director
B. Alteration of the Article under the Order of the Company Law Board:

          Under section 397 to 398 of the Companies Act, the Company Law Board may order a company to alter its articles with the object to resolve the complaints against oppression and mismanagement in the company. The company must file a certificate of the order with the Registrar within 30 days of the issue of that order.

Procedure for alteration of the Articles:
  1. The proposal for alteration has to be approved by the Board of Directors.
  2. The special resolution should be passed in the general meeting held in the appointed date.
  3. Within 30 days of the passing of the resolution, the company has to file Form Number 23 with the Registrar of the companies along with the fees as per schedule X
  4. Incase, the alteration of the article relates to the conversion of public company into a private company, the company should make an application in form 1(B) to the concerned Regional Director for his approval within 3 (Three) months from the date of passing of the special resolution for alteration
  5. After the appraisal, printed copies of the altered articles should be filed by the company with the Registrar within one month of the date of receipt of the approval order. This is required to be done as per section 31 (1)
  6. Incase the shares of the company are listed on the stock exchange as per standard agreement, the company must forward to the stock exchange copies of all notices sent to its shareholders and also file with the stock exchange 6 (six) copies of such amendment and one of which should be a certified copy.
  7. Section 40 requires that the alteration should be noted on each of the Articles of Association.