Companies Act Section 2(3) Alter Or Alteration

Definition of Alter or Alteration in Companies Act, 2013

Alter or Alteration Section 2(3)

The terms "alter" or "alteration" as defined in Section 2(3) of the Companies Act, 2013 refer to the act of making changes to something. Specifically, in the context of the Companies Act, it pertains to making additions, omissions, substitutions, or any other modifications to:

1. Articles of Association:

Articles of association refer to the document that regulates the internal management of a company.

Alteration of articles involves changing the provisions laid out in the articles that govern the company's internal affairs.

2. Memorandum of Association:

Memorandum of association outlines the fundamental conditions on which a company is incorporated.

Alteration of memorandum involves making changes to the fundamental clauses that define the company's constitution and objectives.

Process of Alteration:

1. Approval: Alteration of memorandum or articles typically requires approval by the shareholders of the company. 

The level of approval (ordinary resolution or special resolution) depends on the nature and significance of the alteration.

2. Filing: After approval, the company must file the altered memorandum or articles with the Registrar of Companies (RoC) within a specified period.

3. Effect: Upon filing and registration of the alteration with the RoC, the changes become effective and binding on the company and its members.

Reasons for Alteration:

Companies may alter their memorandum or articles for various reasons, including:

Adaptation: To adapt to changing business conditions or legal requirements.

Flexibility: To provide greater flexibility in the management or operations of the company.

Clarity: To clarify or update provisions that may be ambiguous or outdated.

Compliance: To comply with regulatory changes or directives.

Legal Implications:

Binding Nature: Once altered and registered, the memorandum or articles become binding on the company, its members, and its officers.

Third-party Rights: Alteration does not affect the rights or obligations of third parties acquired prior to the alteration unless expressly agreed otherwise.