Question

Articles of a company can be altered by

• A. The directors of the company
• B. The official of the company
• C. Share holders by passing an ordinary resolution
• D. Share holders by passing a special resolution

Hint:

In Company Law, distinguish between matters requiring an Ordinary Resolution (OR) and those requiring a Special Resolution (SR). SRs are needed for more significant decisions like altering the Memorandum or Articles, changing the company's name, or reducing share capital.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The question asks about the procedure for altering the Articles of Association (AoA) of a company. The AoA are the rules and regulations that govern the internal management of a company.

Step 2: Key Legal Provision:
Section 14 of the Companies Act, 2013, governs the alteration of the Articles of Association.

Step 3: Detailed Explanation:
According to Section 14 of the Companies Act, 2013, a company can alter its Articles of Association by passing a special resolution. A special resolution requires the approval of at least 75% of the members (shareholders) present and voting at a general meeting.
- (A) and (B) are incorrect. Directors or other officials cannot alter the Articles on their own; it requires shareholder approval.
- (C) is incorrect. An ordinary resolution (which requires a simple majority of over 50%) is not sufficient for altering the Articles; a special resolution is mandatory.

Step 4: Final Answer:
The Articles of a company can be altered by the shareholders by passing a special resolution.