Page 67 - DCOM106_COMPANY_LAW

Company Law

Notes big or diversified in various directions that managing becomes difficult or uneconomical,
it may alter its objects to sell or dispose of any of its undertakings.

7. To amalgamate with any other company or body of persons.
Procedure for Alteration of Objects

A printed or a typewritten copy of the special resolution is required to be filed with the Registrar
within thirty days of the passing thereof.
Also a petition is to be filed with the Central Government for confirmation of the special
resolution. The Central Government, being satisfied that the notice of the resolution was given
to all persons whose interests are likely to be affected by the alteration, including the Registrar
and the State Government and having heard them, may confirm the alteration either wholly or
in part.

A certified copy of the order of the Central Government together with a printed copy of the
altered memorandum must be filed within three months of the date of the order, with the
Registrar. The Registrar will register the documents and issue, within one month a certificate
which will be conclusive evidence that everything required has been done (s.18). If the required
documents are not filed within the prescribed time, the alteration and the order of the Central
Government confirming the alteration, shall, at the expiry of such period, become void and
inoperative (s.19).

5.3.4 Alteration of Liability Clause (s.38)

The liability of a member of a company cannot be increased unless the member agrees in
writing. The consent of the member may, however, be given either before or after the alteration.
Increase in liability may be by way of subscribing for more shares than the number held by him
at the date on which the alteration is made or in any other manner.

In case where the company is a club or any other similar association and the alteration in the
memorandum requires the member to pay recurring or periodical subscription or charges at a
higher rate, although he does not agree in writing to be bound by the alteration, it shall be
binding on him.
In case of unlimited liability company, the liability may be made limited. The alteration will,
however, not affect any debts, liabilities, obligations or contracts entered into by or with the
company before the conversion.

5.3.5 Alteration of Capital Clause (S.94)

This clause deals with alteration of share capital and has been discussed in unit 9.

Task The directors of a company borrow 50,000 from A on a transaction which is ultra
vires the company. Discuss the rights of A against the company and its directors. [Hint: A
can hold directors personally liable. The company can be held liable only if the money has
been used to pay ultra vires debts of the company or in case any assets have been purchased
for the company, these may be attached.

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