Corporate Alterations: Strategic and Statutory Changes for Business Growth
Corporate alterations refer to statutory modifications made to a company’s existing structure, operations, or internal documentation. These changes are governed under the Companies Act, 2013, the LLP Act, 2008, and applicable Income Tax and FEMA regulations. Whether driven by expansion, rebranding, governance restructuring, or regulatory compliance, corporate alterations must be carried out through properly authorized resolutions, Registrar of Companies (RoC) filings, and supporting legal documents. Below is a comprehensive overview of the most significant corporate alterations businesses may undergo, their legal implications, and procedural requirements:
Add or Remove Director
Directors are the key managerial personnel responsible for steering a company's policies and operations. Adding a director may be necessary for business growth, investor representation, or regulatory compliance, while removal may follow resignation, disqualification, or strategic changes. The procedure includes:
- Convening a Board Meeting to propose the addition/removal
- Obtaining Digital Signature Certificate (DSC) and Director Identification Number (DIN) for new directors
- Filing Form DIR-12 with the RoC
- Amending internal records and issuing updated resolutions
Legal provisions under Section 152 and Section 168 of the Companies Act, 2013 apply.
Changing the Registered Office Address of the Company
A company may need to shift its registered office within the same city, outside city limits but within the same state, or even across states. Each type of change entails different levels of approvals:
- File Form INC-22 for intra-city or intra-state changes
- Obtain approval from Regional Director using Form INC-23 for inter-state change
- Update statutory records, PAN, GST, and licenses
Registered office changes ensure regulatory alignment and centralized communication with authorities.
Increase in Share Capital
Raising the authorized or paid-up share capital allows companies to issue more shares to investors or meet funding requirements. This is a crucial alteration for scaling operations, restructuring debt, or attracting private eq
- Calling a Board and General Meeting to approve the increase
- Altering the MoA via special resolution
- Filing Form SH-7 with the RoC
This change must reflect in the updated capital clause of the MoA.
Alteration of Memorandum and Articles of Association (MoA & AoA)
These foundational documents define the company’s purpose, scope of operations, and internal governance. Altering them is necessary for changes such as business diversification, name changes, or capital restructuring. Legal steps include:
- Drafting the revised MoA/AoA with the proposed changes
- Passing a special resolution under Section 13 (MoA) and Section 14 (AoA)
- Filing Form MGT-14 with the RoC
These alterations must comply with the Companies (Incorporation) Rules, 2014.
Change in Company Name
Rebranding or merger-related restructuring may require a name change. The process involves:
- Reserving a new name via the RUN (Reserve Unique Name) service
- Passing a special resolution to change the name
- Updating the MoA/AoA accordingly
- Filing Forms INC-24 and MGT-14
The new name must be updated across all statutory registrations and bank accounts.
Closing a Company (Strike Off)
If a company is non-operational or voluntarily chooses to wind up, it can apply for strike-off under Section 248 of the Companies Act, 2013. Key steps include:
- Settling liabilities and obtaining Board/Shareholder consent
- Filing Form STK-2 with affidavits, indemnity bonds, and audit reports
- Publishing notice in the Official Gazette
This ensures the company is removed from the MCA registry and prevents future liabilities.
Closing of a Limited Liability Partnership (LLP)
Non-operational LLPs can be closed by applying for voluntary strike-off under Rule 37 of the LLP Rules, 2009. Requirements:
- Ensure nil assets and liabilities
- File Form LLP-24 with declarations and resolution from designated partners
- Cancel tax registrations and close bank accounts
This relieves the LLP from annual compliance obligations.
Form 15CA and 15CB
These forms are required under the Income Tax Act, 1961 for any payment made to a non-resident or foreign entity. Key highlights:
- Form 15CA: Declaration by the remitter regarding tax deduction on remittance
- Form 15CB: Certification by a Chartered Accountant confirming tax liability and source of funds
- Mandatory for foreign payments above prescribed thresholds
- Submitted electronically through the income tax portal
These ensure compliance with Section 195 on TDS for cross-border transactions and prevent double taxation issues.
Conclusion
Corporate alterations are strategic decisions that align your business with operational, financial, and regulatory goals. However, each alteration demands strict procedural adherence, legal documentation, and timely filing with the relevant authorities. Professional guidance from legal and compliance experts is strongly recommended to avoid penalties and ensure smooth transitions.
Whether it’s a structural update, statutory compliance, or strategic shift, mastering corporate alterations is crucial to sustaining business growth and legal soundness in today’s competitive landscape.