statutory power conferred by Section 31 of the Companies Act

A company may alter its Articles of Association. It is a statutory power conferred by Section 31 of the Companies Act and therefore the company cannot
deprive itself of this power either by a provision in the articles or by a contract with the third party. Therefore, a provision in the articles that the original
articles would not be altered is bad in' law and therefore void
Thus, the Companies Act gives absolute power of alteration of its Articles to a company. However, the power to alter Articles by a company is subject to
certain restrictions. These restrictions are as follows:
1. The alteration must not be inconsistent with the revisions of the Companies Act or :my other Statute Sec. 31]. For example, an alteration to the Articles

cannot be made so as to increase the liability of any member . without his written consent because such alteration shall be contrary to
Sec.
4. Alteration must not be inconsistent with the alteration made by the Company Law Board. The company Law Board has power under Sections 397 and
398 to remedy oppression and mismanagement of the company by ordering alteration of Memorandum and Articles. If CLB has amended the Articles, the
company has no power to further amend the Articles which is inconsistent with the alteration made by the Company Law Board without its permission.
5. Certain provisions cannot be in the Articles altered except with the approval of the Central Government. For example, the conversion of a private
company into a public company needs Central government approval. Such provision cannot be altered by the company unless the primal of the Central
Government is obtained (Sec. 31).
6. The alteration must be made bona fide for the benefit of the compliancy as a whole and not for the benefit of a particular class of
shareholders Brown Vs. British Abrasive 1+!heel Co. Ltd.] Moreover, alteration made bona fide in the interest of the company must be valid even if it is
likely to affect the personal interest of some of the members adversely.
7. The '.Iteration must not constitute a formed on the minority, euthenics it will he void being OIJIJ restive to them .Meier Vs. Hooper's Telegraph 1forks]
8. The dictation must not result in a breach of contorts with outsiders. Such an alteration shall be void and the company shall be liable to pay damages to
the other party Southern Foundries Ltd. Vs. Shirley]. For example. a director has been appointed under the Articles at Rs. 5000 p.m. under al)
independent service contract. Now the company cannot alter the Articles to reduce his remuneration to Rs. 2000 p.m. under the contract.
9. The amended regulation in the articles cannot 0IJerate retrace)ecth'ely, but only from the date of amendment Ware Lal Sharma Vs. Managing
Director, .J & K Industries LId.].
10. Once the alteration is made, it shall have effect as if originally contained in the Articles. The altered Articles will bind the members just in the same
way as did the original Articles. The altered Articles may again be altered by passing a special resolution. Alteration of Articles (Sec. 31]. Being internal
regulations, Articles can be altered freely by the company. The right to alter or add to the Articles is expressly conferred by Sec. 31 of the Companies Act.
Articles may be altered by the company, as often as required by passing a special resolution only. The copy of the resolution together with the printed
copy of the altered Articles must be filed with the Registrar within 30 days of the passing of resolution. The alteration win be detective from the date of
registration of alteration by the Registrar, The power of the company to.alter the Articles is a statutory power. An
alteration cannot deprive the company of this statutory power either by inserting a clause in the Articles or by entering into a contact with anyone
Where the alteration has the effect of converting a public company into a private company, an application (in Form lB) should be made to the Central
Government for approval within three months from the date when the special resolution was passed. After such an alteration has been approved by the
Centre) Government, a printed copy of the Articles as altered must be filed with the Registrar within one month of the date of receipt of the order of
approval Section 31 (2A»).