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Any change in a business will be done more in accordance with the provisions set down in the Business Act of 2013, the Company AOA, and, if any, in accordance with the agreed service arrangement. Again, the requirement for a change of business must be properly explained and accepted by the shareholders of the company.Changes can be made in the business for any cause with the approval of all shareholders. Irrespective of the reason and period, the details that be changed, however it must be with the collective consent of the shareholders. The reason may be something from a shift in the purpose and goal of the organization, a shift of ownership, a transfer from private limited to public limited and so on.
According to section 260 and section 284 of the 1956 Companies Act, a company’s Articles of Association are the basis of authority from which the Board of Directors receives the power to appoint new directors to the Board or replace current directors. The Articles of Incorporation shall allow allowance for including directors.The appointed director must be qualified in accordance with the applicable clauses of the Terms of Incorporation, and must give his permission to be a registered director that the business must report with itself.
Any private limited company in India has 2 directors, and a restricted public company has at least 3 directors. The removal of a director is a significant problem for a business and important measures need to be taken in this respect. A company may remove a Director from its post by approving an ordinary resolution. It is subject to the term the Central Government or a Tribunal did not nominate the chief. A board meeting has to be announced by offering all the directors seven days’ notice.
It is the authorized capital of a private company that determines the maximum amount of shares that can be issued. Most start-ups start with Rs. 1 lakh’s minimum authorized capital, which is too limited as the company expands. The capital provision of the Memorandum of Association is modified to offer new shares or increase the Authorized Capital by passing a special resolution by the Board. Before issuing new equity shares, a business may need to raise its authorized share capital. Authorized share capital is the total amount of the shares that a company may issue, while paid-up capital is the total value of the shares issued by the business. Capital disbursed can never exceed authorized capital.
A private limited company is an artificial judicial entity which involves multiple compliances such as Auditor appointment, annual income tax return filing, annual return filing, and more. Failure to maintain compliance with a business may result in the Directors being fined and/or barred from joining another company.
The company’s shareholders can initiate voluntary winding-up of a company at any time. The outstanding dues must be settled in the event that there are any secured or unsecured creditors or employees on-roll. When the debts have been paid the company’s financial accounts will be closed. Furthermore, the company must control any pending compliance such as income tax return or annual filing and surrender the registration of GST. Once all activities are stopped and the registrations are surrendered, the petition can be filed with the Ministry of Corporate Affairs for the winding up application.
If the objectives and goals or aims of the business are to be changed, you need to amend the memorandum of association. The MOA contains the objectives and goals of the company. It would be difficult if you’re a young company and you want to change the main objective completely. But it can be done quickly if one follows the right methods. For example, There’s a common mistake which many companies do i.e the company includes several domains in the main objective. In this case it would not be approved. So if the company does a software business, it has to include software services in the main objective and the other services such as design should be included in the other objective of the company.
The registered office of a corporation or LLP shall be the principal place of business and all official communications from the Ministry of Corporate Affairs shall be addressed to that place of business. The address of the registry office can be updated within the local limits of the area, town or village by merely providing notice to the registrar concerned within 30 days from the date of the shift.
The name of the company can be changed at any point after its incorporation. As an entity governed by law, it will obey the clear protocol laid down in the Companies Act, 2013. The procedure shall require a meeting of the Board of Directors and a meeting of the Member for their respective agreement, which shall be accompanied by the reservation of the name and the permission of the Central Government for such move.