Alteration of AOA Under Section 14

How the Articles of Association Are Altered

The Articles of Association are the internal rule book of an Indian company. They govern how directors are appointed and removed, how board and general meetings are held, how shares are transferred and how dividends are declared. Section 14 of the Companies Act 2013 allows a company to alter its AOA through a special resolution of shareholders. The altered AOA is filed with the ROC through form MGT 14 within thirty days. The alteration takes effect once the ROC approves the filing.

When Alteration of AOA Becomes Necessary

From inside a CS practice, alteration of AOA is one of the most frequent post incorporation changes for growing businesses. The typical AOA at incorporation is a standard template adopted from Table F of Schedule I. As the business grows, brings in investors or adds an ESOP plan, the standard AOA quickly becomes inadequate. Investors will insist on specific clauses around board composition, protective provisions, drag along, tag along and information rights. An ESOP plan requires authorisation in the AOA. Conversion from Pvt Ltd to public limited (or vice versa) requires deletion or addition of private company restrictions.

Alteration of AOA is achieved through a single MGT 14 filing after a special resolution of shareholders. The change is recorded in the corporate registers and the next investor due diligence will pull the altered AOA from the MCA portal.

Step by Step Alteration of AOA

1. Identify Clauses to AlterWe work with the founder and counsel to identify the specific clauses being altered. New clauses are drafted in plain English with the right cross references to the Companies Act 2013.
2. Board ResolutionThe board approves the alteration and authorises calling of an EGM. The proposed altered AOA is shared with shareholders along with the EGM notice.
3. Notice of EGMTwenty one clear days notice is issued with an explanatory statement under section 102 covering each clause being altered.
4. Special ResolutionShareholders pass a special resolution authorising the alteration. Where entrenched clauses are involved, the higher voting threshold is observed.
5. File MGT 14 With the ROCForm MGT 14 is filed within thirty days of the resolution with the altered AOA and the special resolution attached.
6. Update Corporate RecordsThe altered AOA replaces the original in the corporate records. The next MGT 7 reflects the change. Counterparties relying on the AOA (such as banks) are informed where relevant.

Frequently Asked Questions