Court approves alterations to company's memorandum allowing donations

The court, in an application under section 17 of the Companies Act, 1956, confirmed the alterations to a company's memorandum of association allowing for donations for social, charitable, or humanitarian purposes. The court emphasized that if the alteration falls within the company's powers and does not prejudice safeguarded interests, it must be confirmed. As there was no opposition and the proposed change aligned with the Act's purposes, the court approved the alterations, directing the company to bear its own costs for the application.

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Issues: Application under section 17 of the Companies Act, 1956 for confirming alterations of memorandum of association.

The judgment delivered by B.K. Patra, J. pertains to an application under section 17 of the Companies Act, 1956, by a company seeking confirmation of alterations to its memorandum of association. The company, registered as a limited by shares entity, proposed to insert a new sub-clause in its memorandum of association to allow for donations or grants for various purposes. The company's financial position was reported to be sound, with assets exceeding liabilities significantly. The special resolution for the proposed alteration was duly passed at a general meeting and filed with the Registrar of Companies. Notice of the petition was published in local newspapers, and no opposition was raised. The Registrar of Companies also did not oppose the petition.

The judge referred to the principles outlined in a previous case, Straw Products Ltd. v. Registrar of Companies, regarding the court's role in confirming alterations to a company's memorandum of association. The judge emphasized that if the proposed alteration falls within the company's powers under section 17(1) of the Act and does not prejudice any safeguarded interests under section 17(3), the court must confirm it. The judge highlighted that any alteration should align with the purposes specified in section 17(1)(a) to (g) of the Act. In this case, the proposed alteration aimed to allow donations for social, charitable, or humanitarian purposes, which was deemed acceptable given precedents where donations to political parties were permitted. As there was no opposition to the alteration and considering the nature of the proposed change, the judge found no reason not to confirm the alterations.

In conclusion, the judge allowed the application and confirmed the alterations to the company's memorandum of association as proposed in the special resolution. The company was directed to bear its own costs for the application.

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