Alterations of objects in memorandum
The Act allows the company to alter its object clause with a special resolution. Section 28(1) provides that subject to this section a company may by special resolution alter the provisions of its memorandum with respect to the objects of the company.
Notice of twenty-one days for proposal to alter memorandum The Act states that where a company proposes to alter its memorandum, with respect to the objects of the company, it shall give by post twenty-one days’ written notice specifying the intention to propose the resolution as a special resolution and to submit it for passing to a meeting of the company to be held on a day specified in the notice as mentioned in Section 28(2).
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People who should receive notice of proposal to alter memorandum
Notice shall be given to all members, and to all trustees for debenture holders and if there are no trustees for any class of debenture holders to all debenture holders of that class whose names are, at the time of the posting of the notice, known to the company as mentioned in Section 28(3).
Court may dispense with requirements of subsection 28(2) if there are sufficient reasons
In Section 28(4), the Court may, in the case of any person or class of persons for such reasons as it deems sufficient, dispense with the notice required by subsection (2).
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Application for the cancellation of an alteration
Section 28(5) provides that if an application for the cancellation of an alteration is made to the Court in accordance with this section by –
(a) the holders of not less in the aggregate than ten per centum in nominal value of the company’s issued share capital or any class of that capital or, if the company is not limited by shares, not less than ten per centum of the company’s members; or
(b) the holders of not less than ten per centum in nominal value of the company’s debentures, the alteration shall not have effect except so far as it is confirmed by the Court.
Timeline to make an application to cancel the resolution altering the company’s objects
Section 28(6) provides that the application shall be made within twenty-one days after the date on which the resolution altering the company’s objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they appoint in writing for the purpose.
Actions that may be taken by the Court upon the application to cancel a resolution altering the company’s objects
Section 28(7) states that on application, the Court –
(a) shall have regard to the rights and interests of the members of the company or of any class of them as well as to the rights and interests of the creditors;
(b) may if it thinks fit adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase (otherwise than by the company) of the interests of dissenting members;
(c) may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement; and
(d) may make an order cancelling the alteration or confirming the alteration either wholly or in part and on such terms and conditions as it thinks fit.
The expiration of twenty-one days after the passing of the resolution to alter the objects of a company is required before the resolution can be lodged with the Registrar. Section 28(8) states that, a copy of resolution altering the objects of a company shall not be lodged with the Registrar before the expiration of twenty-one days after the passing of the resolution, or if any application to the Court has been made before the application has been determined by the Court (whichever is the later).
A copy of the resolution needs to be lodged with the Registrar by the company within fourteen days after the expiration of the twenty-one days. Section 28(9) states that, a copy of the resolution shall be lodged with the Registrar by the company within fourteen days after the expiration of the twenty-one days, as referred to in subsection (8) above, but if an application has been made to the Court in accordance with this section the copy shall be lodged with the Registrar together with an office copy of the order of the Court within fourteen days after the application has been determined by the Court.
Compliance by company with subsection 28(9) of The Act
Section 28(10), states compliance by a company with subsection (9) the alteration, if any, of the objects shall take effect.