Company Change and Compliance
Company Change and Compliance
A company is a creation of law and is tightly regulated by the companies act, various rules framed there under and its MOA & AOA. Every change whether it is small or having larger ramification can be done only by following the prescribed rules. However, based on the change/modification to be effected in the company its complexity varies. For instance to change the registered office within the limits of the same city a straightforward and easy procedure is prescribed, which can be completed within hours. Company Change and Compliance
On the other hand, if the company have to change its registered office from one state to another, a detailed procedure is prescribed which involves various time-consuming steps like taking consent of creditors & state government, newspaper publication etc. the process is so cumbersome, it takes months to effect the change. The legal regime which needs to adhere while making any change in the company is as under Company Change and Compliance
GENERAL CHANGES IN MOA & AOA
The Memorandum of Association contains five parts into it, which is Name of the Company, its Situation, the objects for which the company is incorporated, information on capital of the company and at the end a statement that the liability of the shareholder is limited. On the other hand, the articles of association of the company prescribe the internal rules to be followed for its administration and management. Any change in MOA or AOA or Both is done by following the procedure established by law. Since the MOA and AOA is the core document of the company, it can be changed only with the consent of its shareholders and after due approval of the registrar of companies. On the right side, there are links to go to relevant change process for detailed discussion.
CHANGE OF DIRECTOR OR AUDITORS
The company is a legal entity which is collectively owned and controlled by its shareholders, the management of the company is vested with the board of directors thus in a company form of organisation, the administration and ownership are separate. The statutory auditors appointed under section 139 of the companies act, 2013 are vested with legal power and entrusted with the responsibility to audit the financial statement of the company. Any change in directorship or auditors is thus having grave consequences for the company as well as other stakeholders. The rights of each such designation are prescribed in the companies act & their appointment, redesignation, removal, resignation, cessation, disqualification etc. need to be dealt with by the company or the person involved as per standard prescribed
CHANGES IN CAPITAL OR SHAREHOLDING
Every business needs money to achieve its object; ideally, there is two kind of funding, one where the company need to return the investment along with interest, this is known as debt or loan. While another type of investment is, wherein the investor (read shareholder) puts their money in a company for a longer period, and in return is entitled to a share in the profits of the company, also known as the dividend, and expects an appreciation in the value of its investment. In a company form of business investment into the equity is limited to its authorised capital and the allotment of fresh shares are regulated regarding valuation and the first right of the existing shareholders of the company. The company have to follow provisions of its AOA and to obtain approval of the ROC while making any changes in its capital.