It is important for all companies to familiarize themselves with the new Companies and Other Business Entities (Chapter 24:31). The memorandum can only be altered under exceptional cases. It is vital for companies who intend to alter their memorandum to follow all procedures stipulated in the Companies Act.
A special resolution may be used to alter the memorandum. A condition contained in both the memorandum and lawfully in the articles can be altered through a special resolution excluding conditions prohibited from alteration by the memorandum itself. Moreover, a special resolution can be useful in altering the objects of the company. This is only possible when the name of the company describes the objects of the company and the objects have to be altered so that the name of the company no longer describes the objects. It is important to note that the memorandum can only be altered if the name of the company is changed accordingly in terms of section 26 (“Change of name”).
Use of a cancellation application is limited to holders of not less than five per cent in nominal value of the company’s issued share capital and group of shareholders referred to in section 80 (“Group voting on amendments to memorandum”). However, the above-mentioned users should not have voted or consented in favour of the alteration.
A cancellation application has to be made within one month after the date on which the resolution altering the condition specified is made. It can be made on behalf of the persons entitled to make the application. The persons can be appointed in writing. The court can make an order in cases where the application needs amendment. The order is made so that the alteration process is done diligently.
Special Resolution-Companies exempt from using the word “Limited”
The resolution altering the company’s objects shall require notice to the Minister. If no application is made within one month, a copy of the memorandum as altered is delivered to the Registrar. However, if an application is made it will give notice of alteration to the Registrar and within one month a certified copy of the altered memorandum is delivered to the Registrar. Default in giving notice or delivering any document to the Registrar will attract a category 3 civil penalty upon the defaulting company.
In conclusion, companies will not face any challenges in altering their memoranda if they follow all procedures in the companies act. Consultancy organisations can assist companies in explaining procedures and completing the process on the organisations’ behalf.