CS Amey A Patwardhan

Article of Association (AOA) of Companies needs amendment after applicability of Companies Act 2013

There were and there are places in the Old and New Companies Act, where the power / authority / liberty was given to the Company to incorporate such provisions in its Articles of Association so as to override the provisions of the Act or to prescribe certain limits / conditions in certain cases. Here is the list of such Sections in the Companies Act, 2013 (vis-a-vis Sections in Old Act) where the Articles of Association can override provisions of the Act or prescribe the limits / conditions in certain cases – in which a checklist can be made to decide which Articles from existing articles are required to be changed :

Sections which state “As otherwise specified in Articles”

COMPANIES ACT, 2013 Corresponding Article of AoA of the Company Whether Article specifies different requirement from that of the New Act
1 SECTION 62(1)(ii) Further issue of share capital (S.81 of Old Act)
2 SECTION 103(1) Quorum for meetings. (S.174 of Old Act)
3 SECTION 104(1) Chairman of meetings. (S.175 of Old Act)
4 SECTION 106(1) Restriction on voting rights. (S.181 & 182 of Old Act)
5 SECTION 152(1) Appointment of directors. (S.254 of Old Act)
6 SECTION 161(1 TO 4) Appointment of additional director, alternate director and nominee director. (S.260 & 262 of Old Act)
7 SECTION 163 Option to adopt principle of proportional representation for appointment of directors. (S.265)
8 SECTION 174(4) Quorum for meetings of Board. (S.288 of Old Act)
9 SECTION 203(1)(iii)(a) Appointment of key managerial personnel.
10 SECTION 286(proviso c) Obligations of directors and managers. (S.427 of Old Act)
11 SECTION 320 Distribution of property of company. (S.511 of Old Act)
12 SECTION 452(B) Punishment for wrongful withholding of property. (S.630 of Old Act)

Sections which state “if so authorized by its articles”

COMPANIES ACT, 2013 Corresponding Article of AoA of the Company Whether Article uses the authority given by the New Act
1 SECTION 5(3) Articles (Entrenchment – New Provision)
2 SECTION 48(1) Variation of shareholders’ rights (S.106 of Old Act)
3 SECTION 50(1) Company to accept unpaid share capital, although not called up (S.92 of Old Act)
4 SECTION 51 Payment of dividend in proportion to amount paidup (S.93 of Old Act)
5 SECTION 58 Refusal of registration and appeal against refusal (S.111 of Old Act)
6 SECTION 55(2) Issue & redemption of preference shares (S.80 of Old Act)
7 SECTION 61 Power of limited company to alter its share capital (S.94 of Old Act)
8 SECTION 63(2) Issue of bonus shares (No Provision in Old Act)
9 SECTION 85(2) Company’s register of charges (S.144 of Old Act)
10 SECTION 88(4) Register of Members (S.157 of Old Act)
11 SECTION 119 Inspection of minute-books of general meeting. (S.196 of Old Act)
12 SECTION 164(3) Disqualifications for appointment of director (S.274(3) of Old Act)
13 SECTION 167(4) Vacation of office of director (S.283(3) of Old Act)
14 SECTION 187(3) Investments of company to be held in its own name (S.49(8) of Old Act)
15 SECTION 197(4) Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits (S.309(1) of Old Act)
16 SECTION 304 Circumstances in which company may be wound up voluntarily (S.484 of Old Act)

Note: A global change required to be done would be to mention corresponding Sections of the New Act in place of Sections of the Old Act wherever they appear in the Articles.

CS ​ Amey A Patwardhan, E​-Mail- cs.ameypatwardhan@gmail.com​, Voice-9833359049

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  1. Sheetal says:

    Is it must to add clause for appt of nomine director in AOA? there is an existing general authorisation clause in AOA but not an express clause in regard to this.

    pls advice.

  2. Anantt says:

    Good write up but I agree with Manuj. The amendment in articles is not compulsory. Please refer to section 5(9) of the New Act. We would be required to follow the provisions related to articles only when the articles are amended under the New Act.

  3. Manuj says:

    Please note that Section 5(9) of The Companies Act, 2013 states “Nothing in this section shall apply to the articles of a company registered under any previous company law unless amended under this Act”

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October 2020