Companies Act 2013

Section 13: Alteration of memorandum.

Chapter II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETOProvisions of the Companies Act, 2013:
Section 13: Alteration of memorandum.
Rules 2.26 to 2.29 of the Companies Rules, 2013
[Section 13 is not yet brought to force and the Companies Rules, 2013 is not yet brought to force]Corresponding provisions of the Companies Act, 1956:
Sections 16, 17, 18, 19, 21, 23 and 37Corresponding provisions of the English Companies Act, 2006
Sections 37, 77 to 81 (change of name) and 87

Applicability:
This section is applicable to all companies.

Memorandum of association contains following clauses:
(a) Name of the Company,
(b) State of India where registered office of the company is situated,
(c) Main objects of the Company and matters considered necessary in furtherance thereof,
(d) Liability of members of the company; and
(e) Authorised share capital of the company.

Alteration made under section 13 shall have any effect until it has been registered. [section 13 (10)].

Special resolution: [section 13 (1) and (6)]
For alteration of any of the clauses [as aforesaid, except (e)] of memorandum of association, consent of members by way of special resolution is required. However, in case of alteration of authorised share capital (as stated in (e) above), consent of members by way of ordinary resolution as stated in section 61 is required.

The company is required to file special resolution passed by shareholders for alteration of memorandum of association with the Registrar of Companies [section 13(6)].

Change of name clause of memorandum: [section 13 (2) and (3)]
For change of name of the company, which is part of memorandum of association of the company, written approval of the Central Government is required and provisions of section 4 (2) and (3) of the Act shall be complied with.
However, in case of conversion of status of a company from one class to another, procedure prescribed for conversion shall be followed and consequential addition or deletion of word ‘Private’ in name of the company shall not require approval under section 13. [proviso to section 13(2)].

Draft Rule 2.26
As per the sub-rule (1), change of name shall not be allowed by Central Government in following cases:
(a) Company which has defaulted in filing any document or annual return or financial statement, as required to be filed under the Act, with the Registrar of Companies,
(b) Company which has defaulted on repayment of matured deposits, matured debentures or interest due on deposits or debentures.

The company is required to file with the Registrar of Companies, approval of the  Central Government for change of name of the Company.  [section 13(6)].

Change of name shall be take effect only upon Registrar of Companies issuing fresh certificate of incorporation. [section 13 (3)].

Draft Rule 2.26
As per the sub-rule (2), fresh certificate of incorporation shall be in Form no. 2.27.

Change of registered office clause of memorandum: [section 13 (4), (5), (7)]
For shifting of registered office from one State to another State of India, prior approval of Central Government is required. For this purpose application in form no. 2.28 shall be made to the Central Government and a copy thereof shall also be filed with the Chief Secretary of the State [Rule 2.27 (1) and (5)].

The Central Government shall dispose application within a period of 60 days [section 13 (5)].

Shifting of registered office shall not be allowed where any inquiry, inspection or investigation has been initiated under the Act against the company or any prosecution under the Act is pending against the company. [proviso to rule 2.27 (10)].

An application shall be accompanied with several documents including list of creditors and debenture holders, if any. Said list shall be prepared as on latest practical date which shall not be older than 30 days.
Further, an affidavit verifying the said list shall be given by Company Secretary, if any and atleast two of the directors of the Company, one of whom shall be managing director, if any. [rule 2.27(2)].
An affidavit from directors is also required to be submitted, along with the application, stating that no employees shall be retrenched as a consequence of shifting of registered office. [rule 2.27(3)].
To dispose of application, hearing shall take place. The company shall atleast 14 days before the date of hearing, [rule 2.27(6)]:
(i) give advertisement (about date, time and venue of hearing) in newspapers in vernacular and English language, in vernacular and English newspapers, respectively, circulating in the district where registered office of the applicant company is situated at time of application;
(ii) serve notice of hearing  (about date, time and venue of hearing) by registered post acknowledgement due
(a) individually to all creditors and debenture holders,
(b) to Registrar of Companies; and
(c) along with copy of application to SEBI, in case of listed company, and to other regulatory body if the company is regulated by any special law.

Objections, if any, received by the applicant company shall be forwarded to the Central Government on or before the date of hearing. [rule 2.27 (7)].

Where no objections are received, an application may be disposed of without hearing. [rule 2.27 (8)].

The Central Government shall ensure that the applicant company either obtains consent of objecting creditors or satisfies debt or secures the debt of objecting creditors. [rule 2.27 (9) and section 13 (5)].

Central Government may put terms and conditions while granting the approval, including order as to costs. [rule 2.27 (10)].

Within 30 days of receipt of order of the Central Government approving the alteration of registered office clause of memorandum of association, the Company shall file file the certified true copy of the order in Form no. 2.29 with the Registrar of Companies of each of the States. The Registrar of Companies shall register the same.  Further, the Registrar of the State where the registered office is being shifted to, shall issue a fresh certificate of incorporation indicating the alteration. [section 13 (7) and rule 2.28].

Change of object clause of memorandum: [section 13 (8), (9)]
Where money is raised by a company from public by issue of prospectus and still has got those money unutilised then for change of object clause of memorandum of association, the company would require consent of members by way of special resolution with specific prescribed disclosures.

While section 13 (8) speaks generally of change of object clause where money is raised from public by issue of prospectus and remaining unutilised, draft rule 2.29 prescribes procedure only when there is a change in the objects as stated in prospectus, stating which the money was raised.

Postal ballot and contents of notice: [rule 2.29 (1)]
Consent of members by special resolution shall be obtained by way of postal ballot.  The notice to members shall contain the following:
(a) total money received (from public by issue of prospectus which remained untilised at time of seeking consent for change of object);
(b) total money utilized for the objects stated in the prospectus;
(c) unutilized amount out of the money so raised through prospectus,
(d) particulars of the proposed alteration/ change in the objects;
(e) justification for the alteration/change in the objects;
(f) amount proposed to be utilized for the new objects;
(g) estimated financial impact of the proposed alteration on the earnings and cash flow of the company;
(h) other relevant information which is necessary for the members to take an informed decision on the proposed resolution;
(i) place from where any interested person may obtain a copy of the notice of resolution to be passed.

Newspaper advertisement [section 13 (8)(i) and rule 2.29 (2)]
The details of such resolution shall also be published in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated and shall also be placed on the website of the company, if any, indicating therein the justification for such change.
Advertisement shall be in form no. 2.30 which shall be published simultaneously with the dispatch of postal ballot notices to shareholders.

The notice shall also be placed on the website of the company, if any. [rule 2.29 (3)].

Dissenting shareholders [section 13 (8)(ii)]
The dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the SEBI. SEBI is yet to notify regulation for the same.

While money is received from public by the company, exit opportunity shall be given by promoters and shareholders having control.

Above procedure of postal ballot, newspaper advertisement and exit opportunity to dissenting shareholders shall not apply
(a) where money is raised by a company from public by issue of prospectus and has got those money fully utilised; and
(b) where the company has not raised any money from public.

The Registrar shall register any alteration of the memorandum with respect to the
objects of the company and certify the registration within a period of thirty days from the date of filing of the special resolution. [section 13 (9)].

Change of liability clause of memorandum: [Section 13(11)]

In the case of a company limited by guarantee and not having a share capital, any alteration of the memorandum made in order to give or has effect of giving any person (except member) a right to participate in the divisible profits of the company otherwise than as a member, shall be void.

Penalty:

Since no specific penalty or punishment is prescribed for contravention of section 13, general penalty prescribed under section 450 of the Act is applicable. Accordingly, the company as well as its officer who is in default or such other person shall be punishable with fine upto Rs.10,000/-. For continuing offence, they are punishable with further fine upto Rs.1,000/- for every day after the first during which contravention continues.
 
It may be noted that for second or subsequent contravention of the provision of this section, if made within a period of three years, then the company as well as its officer who is in default shall be punishable under section 451 with twice the amount of fine.

Adjudication:

Under Section 454, the officer appointed by the Central Government, not below the rank of Registrar of Companies, may adjudicate and impose monetary penalty for violation of this section, where it decides that no prosecution be launched. However, before imposing penalty, an opportunity of hearing shall be given to the Company and its officers.

Compounding:
It may be noted that under section 441, where offence is punishable with fine only, the same may be compounded by the National Company Law Tribunal or where the fine does not exceed Rs.5,00,000/- by the Regional Director or any other officer authorised by the Central Government.
Both company and every officer who is in default may apply for compounding for violation of section 12.

Summary of forms and records:
Fresh certificate of incorporation in Form no. 2.27 consequent to change of name.
An application for obtaining approval of the Regional Director is required to be made in Form no. 2.28 along with the fees (Rule 2.27)  for shifting of registered office from one State to another.
An order of the Regional Director approving shifting of registered office from one State to another shall be filed with ROC in form no. 2.29 (rule 2.28).
Format of notice to be given in newspaper in Form no. 2.30 (rule 2.29(2)).
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Companies Act 2013

Section 12: Registered Office of the Company.

Chapter II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

Provisions of the Companies Act, 2013:
Section 12: Registered Office of the Company
Rule 2.22 to 2.25 of the Companies Rules, 2013
[Section 12 is not yet brought to force and the Companies Rules, 2013 is not yet brought to force]

Corresponding provisions of the Companies Act, 1956:
Sections 146 and 147

Corresponding provisions of the English Companies Act, 2006:
Sections 86 and 87

Applicability:
This section is applicable to all companies.

A company shall on and from the 15th day of its incorporation and at all times thereafter, have a registered office for receiving and acknowledging all communications and notices as addressed to the company. [Section 12(1)].

Verification of Registered office:
The company shall furnish to the Registrar of Companies (ROC) a verification of its registered office in Form no. 2.25 along with the following documents within 30 days of its incorporation [Section 12(2) r/w rule 2.22]:

1. Registered document of the title of the premises of the registered office in the name of the company; or
2. Notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;
3. Authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office;
4. Document of connection of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner/document as the case may be which is not older than 2 months.
5. the list of all other companies with their CIN, having the same unit/tenement/premises as their registered office address.

 

Publication of Name of the Company: [Section 12(3) r/w rule 2.23]
A company shall paint or affix its name and the address of its registered office outside every office of the company in a conspicuous position in legible characters. Where the name of the company is in language which is not used in that locality, where the registered office of the company is situated, in such case, name and address shall be affixed in that language and also in local language. The Company shall have its name engraved on common seal.

Further, the company shall print its name, registered office address, corporate identity number along with telephone number, fax number, email and website addresses, if any, in all its business letters, billheads, letter papers and in all its notices and other official publications. The company shall print its name on hundies, promissory notes, bills of exchange and such other documents as and when notified by the Central Government.

Where a company has changed its name or names during the last two years, it shall affix or paint or print the former name of the company outside every office of the company in legible characters, and in all its official publications mentioned above.

In case of One Person Company, a company shall affix, print or engrave the words “One Person Company” in bracket below the name of the Company.

 

Notice and verification of change of registered office: [section 12(4) r/w rule 2.24]

1. A company shall give intimation of change in registered office of the company (within the local limits of city, town or village where such office is situated) to ROC within 15 days of such change in Form no. 2.25.

2. Change in / shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated: [Section 12(5) r/w rule 2.25]

Approval of the members of the company by way of special resolution is required for shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated.

3. Further, if shifting of the registered office of the company within the same State but outside the local limits of city, town or village where such office is situated results into falling of new registered office within the jurisdiction of another ROC within the same State then prior approval of the Regional Director is also required to be obtained.

Before making an application to the Regional Director, the company shall publish a notice in newspapers as under:

Atleast one month before filing any application with the Regional Director for the change of registered office, notice shall be published:
(a) at least once in a daily newspaper published in English and in the local language where the registered office of the company is situated and
(b) serve individual notice on each debenture holder, depositor and creditor of the company;
clearly indicating the matter of application and stating that any person whose interest is likely to be affected by the proposed alteration of the memorandum may intimate his nature of interest and grounds of opposition to the Regional Director with a copy to the company within twenty one days of the date of publication of that notice:
In case no objection is received by the Regional Director within twenty one days from the date of service or publication of the notice, the person concerned shall be deemed to have given his consent to the change of registered office proposed in the application:
The shifting of registered office shall not be allowed if any inquiry, inspection or investigation has been initiated against the Company or any prosecution is pending against the company under the Act. [2nd proviso to rule 2.225].

As per Section 12(6) & (7), the Regional Director shall give its confirmation within 30 days from the date of receipt of application made by the company. Further, the company shall file the confirmation with ROC within 60 days from the date of confirmation. The Registrar shall certify the same within 30 days from the date of filing of such confirmation and issue certificate of registration and the change shall take effect from the date of said certificate.

4. Shifting of registered office from one State of India to another is covered by provisions of section 13.

Penalty:
If default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of Rs. 1,000 for every day during which the default continues which shall not exceed Rs. 1,00,000 [Section 12(8)]

Nature of offence:
Since officers of company may be punished with imprisonment, it is necessary to decide nature of offence.
As violation of the section 12 is not covered under sub-section 6 of section 212, it is non-cognizable offence as provided in section 439.

Adjudication:
Under Section 454, the officer appointed by the Central Government, not below the rank of Registrar of Companies, may adjudicate and impose monetary penalty for violation of this section, where it decides that no prosecution be launched. However, before imposing penalty, an opportunity of hearing shall be given to the Company and its officers.

Compounding:
It may be noted that under section 441, where offence is punishable with fine only, the same may be compounded by the National Company Law Tribunal or where the fine does not exceed Rs.5,00,000/- by the Regional Director or any other officer authorised by the Central Government.
Both company and every officer who is in default may apply for compounding for violation of section 12.

Summary of forms and records
A verification of its registered office and notice of every change in registered office of the company shall be filed in Form No. 2.25 (Rule 2.22 and Rule 2.24)
An application for obtaining approval of the Regional Director is required to be made in Form no. 2.26 along with the fees (Rule 2.25)

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