Week 10 audio lecture

Alteration of articles of association

.section 38 of companies act 2017 says that subject to the provisions of act and to the
conditions contained in its memorandum . a comp may by self resolution (that is passed by
three fourth members of company) alter its articles and any alteration so made after passing
the resolution shall be as valid as ifd originally contained in the articles. And be subject in
like manner to aleration by special resolution .There fore it is first condition that we need to
pass special resolution to alter the articles of association. And after passing this we need to
provide a copy of article of association as altered with in thiry days from the date of passing
of resolution be filed by company with registrar of companies and he will register it.

However there are certain restrictions

1. The alteration must not be in contravention with the provisions of companies act.

Fro EXAMPLE;like in companies act sec 241 it is provided that no dividend shall be be paid by
company otherwise then out of profits of copmany.

2. Must not be in contervention with memorandum of company

3 . The alteration must not attempt to legalise something that is illegal

4 The alter must not operate against the substantive right of minority share holders

5 The alter must not be to increase the existing liability of share holder

6 Alter must not amount to a breach of contract with outsider .

7 Alteration must always be made by special resolution of share holders in good faith and for
benefits of company as a whole.