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Liability clause

Priya Kashyap (Student) (7048 Points)

15 March 2019

when and how can company alter its liability clause????

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venkata krishna reddy (chartered accountant) (792 Points)
Replied 15 March 2019

The liability clause cannot be altered to make the liability of the members unlimited. But if all the members agree, and if the Articles permit, the liability of all the directors or any of the directors can be altered. A special resolution must be passed for this purpose.

In such case, however, the liability of the person holding office as Director or Manager before such alteration shall not be made unlimited until the expiry of his present term. His liability for the unexpired period of the present term can be made unlimited only if he gives his consent to his liability becoming unlimited. Therefore, alterations resulting in additional liability on a member cannot be made except with the written consent of the member concerned.

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Priya Kashyap (Student) (7048 Points)
Replied 15 March 2019

very well said thanks a lot

Jatin Bajaj (CS) (2928 Points)
Replied 16 March 2019

As per the provision of section 13 of the Companies act 2013, any clause of memorandum can be altered by passing the special resolution in the general meeting. Company needs to file form MGT 14 within 30 days of holding the general meeting.

However, every alteration shall be incorporated in the memorandum and articles of the company.