Alteration of company objects may include remuneration and benefit provisions if they support efficient achievement of the main purpose.
Section 5(1) of the Companies Act, 1929 permits alteration of a memorandum where the change relates to the company's objects and is directed to carrying on the business more economically or efficiently, or by new or improved means. Amendments that did not alter the main purpose of promoting poultry husbandry, but removed impracticable restrictions and provided for an effective organisational and remuneration structure, were treated as closely connected with the manner of achieving the objects. Those alterations were therefore within the statutory expression and sanctionable.
Issues: Whether the proposed amendments to the memorandum, including provision for remuneration of the governing body and members' participation in benefits, were alterations "with respect to the objects of the company" within the meaning of section 5(1) of the Companies Act, 1929 and therefore capable of sanction.
Analysis: Section 5(1) permits alteration of memorandum provisions where the change relates to the company's objects and is directed to enabling the business to be carried on more economically or efficiently, or to attain the main purpose by new or improved means. The impugned amendments did not seek to change the association's main purpose of promoting poultry husbandry. They were aimed at removing restrictions that had become impracticable as the association expanded, so that the existing objects could be carried out efficiently through an adequate organisational and remuneration structure. Provisions governing remuneration and distribution of benefits, though not themselves the principal object, were treated as provisions closely connected with the manner in which the objects were to be achieved and therefore falling within the statutory expression.
Conclusion: The proposed alterations were held to be alterations with respect to the objects of the company and were sanctionable under section 5(1) of the Companies Act, 1929; the appeal succeeded.
TaxTMI 
AI Drafter ✕
TaxTMI 
