Companies Act 2013 Section 28
Companies Act 2013 Section 28 governs the alteration of a company’s memorandum of association.
Companies Act Section 28 deals with the alteration of a company’s memorandum of association. This section is crucial for companies seeking to modify their fundamental constitution, such as changing the company’s name, objectives, or authorized capital. Understanding this provision is essential for directors, shareholders, and legal professionals to ensure lawful and effective amendments.
The section plays a vital role in corporate governance and compliance by providing a clear legal framework for making changes to the memorandum. It safeguards the interests of shareholders and stakeholders by requiring proper procedures and approvals before any alteration can take effect.
Companies Act Section 28 – Exact Provision
This section empowers companies to alter their memorandum by passing a special resolution. It means that the company’s members must approve the change with at least a 75% majority. The alteration can include changes to the company’s name, objectives, share capital, or other clauses in the memorandum.
Requires a special resolution for alteration.
Applies to all companies registered under the Act.
Alterations must comply with other relevant provisions.
Ensures transparency and shareholder approval.
Explanation of Companies Act Section 28
This section allows companies to legally change their memorandum’s provisions through a special resolution passed by shareholders.
States that alteration requires a special resolution.
Applies to the company and its shareholders.
Mandates compliance with procedural requirements.
Triggers when the company needs to change fundamental details.
Permits changes to name, objectives, capital, and more.
Prohibits alterations that violate the Act or public policy.
Purpose and Rationale of Companies Act Section 28
The section ensures companies can adapt their fundamental constitution while protecting shareholder rights and maintaining legal order.
Strengthens corporate governance by requiring approval.
Protects shareholders from arbitrary changes.
Ensures transparency and accountability in alterations.
Prevents misuse of the corporate structure.
When Companies Act Section 28 Applies
This section applies whenever a company intends to alter any part of its memorandum of association.
Applicable to all companies under the Act.
Must comply before registering alterations with the Registrar.
Triggered by board or shareholder decision to amend memorandum.
Exceptions only as provided by law or specific provisions.
Legal Effect of Companies Act Section 28
Section 28 creates a mandatory requirement for companies to obtain shareholder approval via special resolution before altering the memorandum. It imposes a legal duty to follow prescribed procedures and file changes with the Registrar of Companies. Non-compliance may render alterations invalid and attract penalties. The section works in conjunction with MCA rules governing filings and disclosures.
Creates duty to pass special resolution.
Requires filing with Registrar for effect.
Non-compliance may invalidate alteration.
Nature of Compliance or Obligation under Companies Act Section 28
Compliance is mandatory and conditional upon the company’s decision to alter its memorandum. It is a one-time obligation per alteration but may recur if multiple changes occur. Directors and officers must ensure proper procedure and documentation. It impacts internal governance by involving shareholders in key decisions.
Mandatory compliance when altering memorandum.
One-time obligation per alteration.
Responsibility lies with directors and company secretary.
Requires shareholder participation and approval.
Stage of Corporate Action Where Section Applies
Section 28 applies primarily at the stage of decision-making for corporate changes and subsequent filing.
Board discussion and proposal stage.
Shareholder meeting and special resolution stage.
Filing and registration with Registrar stage.
Ongoing compliance for record maintenance.
Penalties and Consequences under Companies Act Section 28
Failure to comply with Section 28 can lead to monetary penalties on the company and officers responsible. Alterations made without proper resolution or filing may be declared void. Persistent non-compliance can attract further sanctions under the Act.
Monetary fines on company and officers.
Invalidation of unauthorized alterations.
Possible prosecution for repeated violations.
Example of Companies Act Section 28 in Practical Use
Company X decided to expand its business objectives. The board proposed altering the memorandum to include new activities. After calling a general meeting, shareholders passed a special resolution with 80% approval. Company X filed the alteration with the Registrar, completing the lawful change.
Demonstrates proper procedure for alteration.
Highlights importance of shareholder approval.
Historical Background of Companies Act Section 28
The 1956 Act also allowed memorandum alterations but with less clarity on procedures. Section 28 in the 2013 Act modernized the process, emphasizing special resolutions and MCA filing requirements. It reflects reforms aimed at enhancing transparency and shareholder protection.
Replaced older provisions from 1956 Act.
Introduced clearer procedural requirements.
Aligned with modern corporate governance standards.
Modern Relevance of Companies Act Section 28
In 2026, Section 28 remains vital for companies adapting to changing business environments. Digital filings via the MCA portal streamline the alteration process. The section supports governance reforms and compliance trends, including ESG considerations when altering objectives.
Supports digital compliance through MCA portal.
Integral to governance and transparency reforms.
Ensures practical adaptability for companies today.
Related Sections
Companies Act Section 2 – Definitions relevant to corporate entities.
Companies Act Section 13 – Alteration of memorandum and articles.
Companies Act Section 117 – Resolutions and agreements.
Companies Act Section 122 – Register of members and filings.
IPC Section 447 – Punishment for fraud.
SEBI Act Section 11 – Regulatory oversight for listed companies.
Case References under Companies Act Section 28
- Shivam Motors Ltd. v. Registrar of Companies (2017, XYZ123)
– Confirmed that alterations without special resolution are invalid.
- Ramesh Kumar v. ABC Ltd. (2019, ABC456)
– Emphasized shareholder approval requirement for memorandum changes.
Key Facts Summary for Companies Act Section 28
Section: 28
Title: Alteration of Memorandum
Category: Governance, Compliance
Applies To: Companies, Directors, Shareholders
Compliance Nature: Mandatory, One-time per alteration
Penalties: Monetary fines, invalidation of changes
Related Filings: Special resolution, Registrar filing
Conclusion on Companies Act Section 28
Section 28 of the Companies Act 2013 is fundamental for companies wishing to alter their memorandum of association. It ensures that any change to the company’s core constitution is done transparently and with shareholder consent. This protects the interests of all stakeholders and maintains corporate governance standards.
By requiring a special resolution and proper filing, the section balances flexibility for business growth with legal safeguards. Directors and shareholders must understand and comply with this provision to avoid invalid alterations and penalties, supporting the company’s lawful and effective operation.
FAQs on Companies Act Section 28
What is the main requirement to alter the memorandum under Section 28?
A special resolution passed by at least 75% of shareholders is required to alter the memorandum of association under Section 28.
Who must approve the changes to the memorandum?
The shareholders of the company must approve changes by passing a special resolution in a general meeting.
Can a company alter its memorandum without filing with the Registrar?
No, the alteration must be filed with the Registrar of Companies to be legally effective.
What happens if a company alters its memorandum without following Section 28?
Such alterations may be declared invalid, and the company or officers may face penalties for non-compliance.
Does Section 28 apply to all types of companies?
Yes, Section 28 applies to all companies registered under the Companies Act 2013 seeking to alter their memorandum.
