The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 49. Restriction on alteration of memorandum
(1) A company may not alter the conditions contained in its memorandum except in the cases and in the manner and to the extent for which express provision is made in this Act.
(2) Only those provisions which are required by section 27 or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned, are deemed to be conditions contained in its memorandum.
Section 50. Alteration of memorandum
(1) The name of the company shall not be altered except with the consent of the Commission in accordance with section 30.
(2) The business which the company is authorised to carry on or, if the company is not formed for the purpose of carrying on business, the objects for which it is established, may be altered or added to in accordance with the provisions of section 51.
(3) Any restriction on the powers of the company may be altered in the same way as the business or objects of the company.
(4) The share capital of the company may be altered in accordance with the provisions of sections 128-130, but not otherwise.
(5) Subject to section 54, any other provision of the memorandum maybe altered in accordance with section 51, or as otherwise provided in this Act.
Section 51. Mode of alteration of business or objects
(1) Where a company has stated its business or objects in its memorandum, such a company may, at a meeting of which notice in writing has been duly given to all members (whether or not they are entitled to), by special resolution alter the provisions of its memorandum with respect to the business or objects of the company : Provided that if an application is made to the Court in accordance with this section for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the Court.
(2) An application under this section may be made to the Court by the holders of not less—
(a) in the aggregate, than 15% in nominal value of the company’s issued share capital or any class thereof or, if the company is not limited by shares, not less than 15% of the company’s members ; or
(b) than 15% of the company’s debentures entitling the holders to object to alterations of its objects : Provided that any such application shall not be made by any person who has consented to or voted in favour of the alteration.
(3) An application under this section shall be made not later than 28 days after the date on which the resolution altering the company’s business or objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of them as they may appoint in writing for that purpose.
(4) On an application under this section, the Court may make an order confirming the alteration either wholly or in part and on such terms and conditions as it deems fit, and may adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interest of dissenting members, and the Court may give such directions and make such orders as it considers expedient for facilitating or carrying into effect any such arrangement, but that no part of the capital of the company shall be expended in any case.
(5) The debentures entitling the holders to object to alterations of a company’s business or objects shall be any debenture secured by a floating charge.
(6) The special resolution altering a company’s business or objects requires the same notice to the holders of such debentures as to members of the company, and in default of any provision regulating the giving of notice to any debenture holder, the provisions of the company’s articles regulating the giving of notice to members shall apply.
(7) Where a company passes a resolution altering its business or objects and—
(a) application is thereafter made to the Court for its confirmation under this section, the company shall forthwith give notice to the Commission of the making of the application, and thereafter there shall be delivered to the Commission within 15 days from the date of its making—
(i) a certified true copy of the order, in the case of refusal to confirm the resolution, and
(ii) a certified true copy of the order, in the case of confirmation of the resolution together with a printed copy of the memorandum as altered ; and
(b) no application is made with respect to confirmation to a Court under this section, the company shall, within 15 days from the end of the period for making such an application, deliver to the Commission a copy of the resolution as passed.
(8) If the Commission—
(a) is satisfied, a printed copy of the memorandum as altered by the resolution shall forthwith be delivered to it ;
(b) is not satisfied, it shall give notice in writing to the company of its decision and an appeal from its decision shall thereafter lie to the Court at the suit of any person aggrieved and such appeal shall be made within 21 days from the date of the receipt by the company of the notice of rejection, or within such extended time as the Court may allow.
(9) The Court may at any time extend the time for the delivery of documents to the Commission under subsection (7) (a) for such period as the Court may consider proper.
(10) If a company defaults in giving notice or delivering any document to the Commission as required by subsection (7), the company and every officer of the company who is in default is liable to such penalty as the Commission shall prescribe by regulation, and for every day during which the default continues.
(11) The validity of an alteration of the provision of a company’s memorandum with respect to the business or objects of the company shall not be questioned on the ground that it was not authorised by subsection (1) except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of 21 days after the date of the resolution in that behalf, and where such proceedings are taken otherwise than under this section, subsections (6), (7), (8) and (9) of this section shall apply in relation thereto as if they had been taken under this section, and as if any order declaring the alteration invalid were an order cancelling it and as if any order dismissing the proceedings were an order confirming the alteration.
(12) For the purpose of this section only, any reference to “member” includes any person financially interested in the company within the context of subsection (2) (b).
Section 52. Power to alter provisions in the memorandum in certain cases
(1) Subject to the provisions of section 49 and of this section and of any part of Part B (which preserves the rights of minorities in certain cases) any provision in a company’s memorandum, which might lawfully have been in articles of association instead of in the memorandum, may be altered by the company by special resolution, but if an application is made to the court for the alteration to be cancelled, the alteration does not have effect except in so far as it is confirmed by the Court.
(2) This section does not apply where the memorandum itself provides for or prohibits the alteration of all or any of the said provisions, and shall not authorise any variation or abrogation of the special rights of any class of members.
(3) Section 51 (2), (3), (4), (7), (8) and (9) (which relate to mode of alteration of business or objects) except subsection (2) (b) thereof, shall apply in relation to any alteration and application made under this section as they apply in relation to alterations and to applications made under that section.
(4) This section applies to a company’s memorandum, whether registered before or after the commencement of this Act.
Section 53. Alteration of articles
(1) Subject to the provisions of this Act and to the conditions or other provisions contained in its memorandum, a company may, by special resolution, alter or add to its articles, including deletion or modification of the provisions stated in section 27 (1) (a)-(d).
(2) Any alteration or addition made in the articles shall, subject to the provisions of this Act, be as valid as if originally contained therein and be subject, in like manner, to alteration by special resolution.
Section 54. Limitation of liability to contribute to share capital if memorandum, etc., altered
Except to the extent to which a member of a company agrees in writing at any time to be bound thereby, and anything to the contrary in the memorandum or articles notwithstanding, the member shall not be bound by any alteration made in the memorandum or articles of the company requiring him on or after the date of the alteration to—
(a) take or subscribe for more shares than he held at the date on which he became a member ;
(b) increase his liability to contribute to the share capital of the company; or
(c) pay money by any other means to the company.
What this means
Short answer
A company can alter its memorandum only as the Act expressly allows (section 49(1)). The name changes under section 30, the business or objects by special resolution under section 51, and other provisions that could have been in the articles by special resolution under section 52. The articles themselves can be altered by special resolution (section 53).
What counts as a condition of the memorandum
Only the provisions that section 27 or another specific provision requires to be in the memorandum are conditions of it (section 49(2)). Section 50 then points each kind of change to its route: the name by section 30, business or objects and restrictions on powers by section 51, share capital by the share capital provisions, and any other provision by section 51 or as the Act otherwise provides.
Changing the business or objects
Under section 51, a company that has stated its business or objects in the memorandum can alter them by special resolution at a meeting of which written notice has been given to all members, whether or not they are entitled to vote.
- Challenge. The holders of at least 15% in nominal value of the issued share capital, or of any class, can apply to the court to cancel the alteration. For a company not limited by shares the figure is 15% of the members, and holders of at least 15% of debentures secured by a floating charge can also apply. Anyone who consented or voted in favour cannot apply (section 51(2)).
- Time limit. The application must be made within 28 days of the resolution (section 51(3)).
- Court order. The court can confirm the alteration wholly or in part, and can adjourn so that dissenting members’ interests can be bought out, but no part of the company’s capital may be spent on it (section 51(4)).
- Filing. The company notifies the Commission of any court application. Within 15 days it delivers a certified copy of the order and, if confirmed, a printed copy of the altered memorandum, or, if no application was made, a copy of the resolution within 15 days of the end of the period for applications (section 51(7)).
- Commission refusal. If the Commission is not satisfied it gives written notice, and an aggrieved person can appeal to the court within 21 days (section 51(8)).
The validity of the alteration cannot be questioned after 21 days from the resolution on the ground that it was not authorised (section 51(11)).
Other provisions in the memorandum
Any provision in the memorandum that could lawfully have been in the articles can be altered by special resolution, subject to the same court cancellation procedure, unless the memorandum itself provides for or prohibits the alteration. It cannot vary or abrogate the special rights of a class of members (section 52).
Changing the articles
A company can alter or add to its articles by special resolution, including deleting or modifying provisions stated in section 27(1)(a) to (d), subject to the Act and the memorandum. An alteration is as valid as if it had been in the articles from the start (section 53). A special resolution must meet the notice and majority rules in section 258 and be filed with the Commission.
Protection for members
Despite anything in the memorandum or articles, a member is not bound by an alteration made after he became a member that requires him to take or subscribe for more shares than he held, to increase his liability to contribute to share capital, or to pay money to the company in any other way, unless he agrees in writing (section 54).
Questions and answers
How do I change a company’s objects?
By special resolution at a meeting of which written notice was given to all members (section 51(1)). Holders of at least 15% can apply to the court within 28 days to cancel it.
How do I change a company’s articles?
By special resolution (section 53(1)).
Can an alteration force me to buy more shares?
No, unless you agree in writing. Section 54 protects members from alterations requiring more shares, more liability or payments.
How long after a change of objects can the validity be challenged?
Proceedings on the ground that it was not authorised must be taken before 21 days after the resolution (section 51(11)).
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