Every shareholder and every director of a company needs to act in accordance with a company’s articles of association.
A company can change its articles by passing a special resolution. This means that shareholders with at least 75% of the votes need to approve the change.
Section 31 of the Companies Act states that the Articles of Association can be altered at any time by a special resolution. A copy of the same must be filed with the Registrar of Companies. However, this power of alteration is subject to two restrictions:
i.The alteration must be in accordance with the provisions of the Act
ii. The alteration is subject to conditions stated in the MOA
iii. Any alteration that converts a public company into a private company must be approved by the Central Government.
The Memorandum of Association (MOA) and the Articles of Association (AOA) are two important papers that are created when a business is formed. The Memorandum of Association and the Articles of Association of a corporation are both subsidiaries of the business. The Memorandum of Agreement (MOA) is the company’s most important legal instrument. Any articles that go beyond the Memorandum of Association are deemed ultra vires.
