Page 228 - DMGT407Corporate and Business Laws

Unit 9: Memorandum of Association

A printed or a typewritten copy of the special resolution both under s.146 and s.17 should be sent Notes
to the registrar within 30 days of its passing.
A certified copy of the order of the Central Government should be filed within three months
thereof with the registrar of each State – the old and the new State. If it is not filed within the
prescribed time, then the alteration shall, at the expiry of such period, become void and inoperative.

A notice of the new location of the registered office must be given to the registrar of the State to
which the office has been shifted, within 30 days after the change of the office (s.146).
A company is in a position to shift its registered office from one State to another for certain
purposes only. These are discussed in the following paragraph (under ‘Alteration of objects’ –
the grounds being common).

9.3.4 Alteration of Objects Clause

Section 17 empowers a company by a special resolution duly confirmed by the Central
Government, to alter the objects or to change the place of its registered office from one State to
another if the alteration is sought on any of the following grounds:

1. To carry on its business more economically and more efficiently: In Dalmia Cement (Bharat)
Ltd., In re (1964) 34 Comp. Cas. 729 (Mad.), the court observed that whether a company can
carry on its business more economically or more efficiently is a matter for the judgement
of the directors. If the directors consider that under the existing circumstances, it will be
convenient and advantageous to combine the new objects with the existing objects and, if
it appears that such a conclusion may be fairly arrived at, the court (now Central
government) will not go behind it and hold an enquiry as to whether the opinion of the
directors is well founded or is justified.
The true legal position, observed the Delhi High Court, is that the business must remain
substantially the same and the additions, alterations and changes should only be steps-in-
aid to improve the efficiency of the company [Delhi Bharat Grain Merchants Assn. Ltd., In
re (1974) 44 Comp. Cas. 214 (Delhi)].
In Re, Scientific Poultry Breeders Association (1933) 3 Comp. Cas. 89 (CA), a company’s
memorandum prohibited payment of remuneration to the members of its governing
body. It wanted for efficient management, amendment in the memorandum to enable it to
pay remuneration to its governing body members. The change was allowed.
2. To attain its main purpose by new or improved means: For the companies registered after
10th October, 1965, there is no difficulty in ascertaining the main purpose because the
memorandum would state it. But for the companies registered earlier, one has to look not
only to the memorandum but also to what has actually been done.
3. To enlarge or change the local area of its operation: In Indian Mechanical Gold Extracting
Company, In Re (1891) 3 Ch. 538, the company’s business was confined to the ‘Empire of
India’. It wanted to enlarge its operations by dropping these words. It was allowed to do
so on the condition that the word ‘Indian’ was also dropped from its name.
4. To carry on some business which under existing circumstances may be conveniently or
advantageously combined with the business of the company: In fact, most of the
amendments sought in objects clause are based on this ground. This clause enables a
company to diversify. The working of the clause makes its scope very wide in as much as,
any activity which may either conveniently or advantageously be combined with the
existing business, may be allowed.
5. To restrict or abandon any of the objects specified in the memorandum: Even for deleting
any portion of the object clause, the procedure laid down in s.17 has to be followed.

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