Alteration of Memorandum

Alteration of Objects

The power of alteration of objects is subject to two limits, namely –
(1)    Substantive or physical limit, and
(2)    Procedural limit.
Substantive limit. Section 17(1) of The Companies Act, 1956, the objects of a company may be altered by special resolution so as to enable the company –

(a)    To carry on its business more economically or more efficiently.

Scientific Poultry Breeders’ Assn., Re (1933)

A company which was formally forbidden by its Articles of Association from paying remuneration to its managers wanted to allow its objects clause so as to acquire power to pay this remuneration to carry on its business more economically or efficiently. The alteration was allowed

(b)    To enlarge or change the local area of its operations.

Egyptian Delta Land & Investment Co., Re (1907)

A company which was formed to acquire land in Egypt wanted to alter its Memorandum to take power to acquire land in Sudan. Held, the alteration could made provided the company inserted the words ‘and Sudan’ after the word ‘Delta’ in its name.

Memorandum of Association

The name clause...

Asiatic Govt. Security Life Insurance Co. Ltd. V. New Asiatic Insurance Co. Ltd., (1939)

In this case although the names of the 2 companies, Asiatic Government Security Life Insurance Company Limited and New Asiatic Insurance Company Limited resembled to a large extent, it was held by the Court that the two names were not identical, and, therefore, the defendants were not restrained from using their name.

The object clause

Egyptian Salt & Soda Co. Ltd. V. Port Said Salt Assn. Ltd., (1931)

The purpose of the object clause is –
- To enable creditors and persons dealing with the company to know what its permitted range of enterprise or activities is.