The AQicles of Association can be altered or added to by passing special Resolution provided (a) the alteration is not contrary to the provision of the Act, (b) it is not inconsistent with or beyond the provisions of the Memoramdum, and (c) it does not increase the liability of member withou his written consent by compelling him to take more shares than he had held prior to the alteration. Moreover, no alteration can be made which has the effect or converting republic compaly into a private company unless approval of the Central Government has been obtained in that respect and a printer copy of the Articles as altered has been filed Witil the Registrar within one month of the Gate of receipt Or the order (Secs 31, 7 8)
Restrictions. Arising out of several decisions, companies are also required to keep in view the fGllowi with regard to alterati m
INCORPORATION OF A COMPANY 101
don n the objectives for v Rich the company has beert incorporated. It sets the scope of the company it gives the details of the power which the company NNi l enjov after its incorporation. It controls the relationship of the company pith the shareholders on the one hand and the outsiders on the other.
The Articles of Association is itn administrative charter of the company. It defines the duties, powers and responsibilities of the o ticers of toe company as well as those of the Dlrectors. It lays down the regulations vNith the help of which-day-to day affairs of the company will be managed. It also sets Ollt the modes which will be adopted in achieving the objectives of the company it is. thus, a controller of the internal relations of the company in words as well as spirit.
Dominance of It cmortundum. The regulations contained in the articles can neit be violative nor can cross the limits of the Memorandum. The Articies cannot give validity to any provision which is not consistent N tth the provisions of tile Memorandum. 'fhe Memorandutn 7a fundamental and dominant. The Prrhcles IS subordinate to the memorandum. The provisions of the Arhcles. therefore, cannot go beyond the scope of the Memorandum.
Importance of Al titles But all these does not mean that the Articles is of lesser importance. Certainly not. A Memorandum can at best give the broad limits of the powers, scope and objects NNithin Nbich the company will functmn. But Arhcles giN es the details elaborating these powers, scope and objectives so as to manage the company efficientl with an eye on success and achievement. The arhc]es offer explanation to what t'ne memoranda
might have simph- hinted or might have Lept it cool or might haNe been ambiguous The open the door NNllich l itherto nught has e been closed bv the Memorandum Of course. there is no denying the fact that the Articles do embark on explanation etc within the limits prescribed by the Memorandum. And on am- matter IN hicl. is specially required by the Act to be mentioned in tree Memorandum, tne Articles is not allotted to com.efoNvard and explain 7f it does so it NNill be void and inoperative.