A company can change its articles of association by calling a meeting of the shareholders and passing a resolution. A company can amend the articles for any reason that involves improvement of the business prospects. A company may wish to amend the articles to diversify its business or enhance the scope of its existing business.

The articles of association are the regulations which govern a company’s internal affairs. The articles govern the company’s management structure and hierarchy. The articles also provide a framework for implementing the objectives of the company. The objectives of a company can be found in the memorandum of association. A company’s business should be conducted according to the articles. The articles establish a contract between the company and the members. The contract governs the rights and obligations of the members.

Any Company which intended to make any change to the Article of Association (AOA) of its company, will have to comply with the provisions of Section- 14 of Companies Act, 2013 and any other applicable provisions of the Act and applicable rules. Company can alter its Article by way of addition, deletion, modification, substitution, or in any other way, only if it wants.

Note: * Every alteration made in the articles of a company shall be noted in every copy of the memorandum or articles.

All companies are permitted to amend the articles by fulfilling the applicable legal requirements. The Ministry of Corporate Affairs governs the procedure for amendment of the articles.

Conditions

The following conditions should be followed by a company which is altering the articles of association:

• The alteration should not introduce any terms which are inconsistent with the objectives of the company.
• The alteration should not contravene or contradict the terms of the memorandum.
• The alteration should be consistent with the Companies Act, 2013 and other applicable laws.
• The alteration should be for the benefit of the company as a whole.
• The alteration should not introduce any terms which are disadvantageous to a minority of the shareholders.
• A company may be under litigation relating to the terms of the articles. In such cases, the alteration should be made under the guidance of the court.
• The alteration should not be made retrospectively. The effective date appointed for the modification should not be before the date of passing a special resolution.
• The alteration should not change the paid-up value of the shares.
• The alteration should not change the company’s liabilities towards lenders.
• The alteration should not remove any person from membership in the company.
• The alteration should not cancel the voting rights available to the shareholders.
• The alteration should not prevent shareholders from attending meetings.
• The alteration should not introduce benefits to persons who are not members of the company.
• The alteration should not be used as a method to enter into an agreement with persons who are not members of the company.