Whether a company can alter its articles of association in any other way than by a special resolution passed at general meeting?
Sub-section (1) of Section 31 of the Companies Act, 1956 in relevant part reads as follows:
"Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may, by special resolution, alter its articles: ..."
When all the shareholders interested in a company entered into an agreement which modified the articles of association, but was not drafted as a resolution nor passed at a general meeting, the articles could nevertheless be deemed to be effectively modified. This is on the basic principle of company law that all the shareholders of a company acting together can do anything intra vires the company. Section 31(1) of the Companies Act, 1956 does not undermine that principle but merely lays down the procedure whereby some only of the shareholders can validly alter the aritcles. See: Cane v. Jones, (1981) 1 All E R 533 (Ch D) : [1980] 1 WLR 1451.
In view of the above decision of the Chancery Division, a company can alter its articles even without convening a general meeting and passing a special resolution.
Sub-section (1) of Section 31 of the Companies Act, 1956 in relevant part reads as follows:
"Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may, by special resolution, alter its articles: ..."
When all the shareholders interested in a company entered into an agreement which modified the articles of association, but was not drafted as a resolution nor passed at a general meeting, the articles could nevertheless be deemed to be effectively modified. This is on the basic principle of company law that all the shareholders of a company acting together can do anything intra vires the company. Section 31(1) of the Companies Act, 1956 does not undermine that principle but merely lays down the procedure whereby some only of the shareholders can validly alter the aritcles. See: Cane v. Jones, (1981) 1 All E R 533 (Ch D) : [1980] 1 WLR 1451.
In view of the above decision of the Chancery Division, a company can alter its articles even without convening a general meeting and passing a special resolution.
