A shareholder wants a copy of our MoA and AoA - what must we give?

A shareholder has written to the company. The ask is short: "Please send me a copy of the memorandum and articles." It looks routine. It is also a request the Companies Act 2013 has put on a clock, with a daily penalty attached.

This guide explains what you must send, to whom, by when, and what happens if you sit on the request. It is written for the director or company secretary who has just opened that email.

Who is entitled to ask

The right belongs to a "member" of the company. Section 17(1) of the Companies Act 2013 says the company must act "on being so requested by a member".

The Act defines "member" in section 2(55). It covers three kinds of people:

the subscriber to the memorandum, who is deemed to have agreed to become a member and is entered in the register of members on registration;
every other person who agrees in writing to become a member and whose name is entered in the register of members; and
every person holding shares of the company whose name is entered as a beneficial owner in the records of a depository.

So the first check is simple. Is the person on your register of members? If yes, the right is theirs. A person who only says they "are about to invest" does not fit any of these three limbs, and a former shareholder whose name is no longer on the register needs the same check. Verify the name against your register before you decide how to reply.

What you must send

Section 17(1) lists three things. The company must send "a copy of each of the following documents":

the memorandum (the MoA);
the articles (the AoA); and
every agreement and every resolution referred to in section 117(1), "if and in so far as they have not been embodied in the memorandum or articles".

Rule 34 of the Companies (Incorporation) Rules 2014 repeats the same three items almost word for word.

The first two are easy. The memorandum is the company's founding document. The articles are the internal rule book for management (section 5(1), Companies Act 2013). Send the current, altered version of each, not the one signed at incorporation, if either has been changed.

The third item is where companies slip. Many companies send only the MoA and AoA and forget it.

The third category, in plain words

Section 117 is about resolutions and agreements that must be filed with the Registrar of Companies. Section 117(3) lists them. They include:

special resolutions;
resolutions agreed by all members that would otherwise have needed to be passed as special resolutions;
a board resolution or agreement on the appointment, re-appointment, renewal or change of terms of a managing director; and
resolutions or agreements agreed by a class of members that would not have been effective unless passed by a specified majority.

Section 17 asks for these only "if and in so far as they have not been embodied in the memorandum or articles". Think of an alteration of the articles. If the articles you send already have the change built in, nothing more is needed for that resolution. If the change sits in a separate special resolution and is not built into the articles, the member is entitled to a copy of that resolution too.

The proviso to section 117(1) points the same way. A copy of every resolution that alters the articles, and every agreement under section 117(3), must be "embodied in or annexed to every copy of the articles issued" after the resolution or agreement. So when you send the articles, check that the altering resolution travels with them.

What you can still do today

You do not need to wait for a formal notice. Do these in one sitting:

Confirm the person is a member, by checking the register of members or the depository records.
Pull the current MoA and AoA. Pull every special resolution and every other section 117(3) resolution or agreement that is not yet built into them.
Note the date and time the request reached the company. This starts your clock.
Reply in writing to acknowledge the request and say when the documents will go out.
If a fee applies, tell the member the amount and how to pay.

The shareholder could also get the documents from the Registrar. Section 399(1)(a) of the Companies Act 2013 lets "any person" inspect electronically the documents filed with the Registrar, on payment of the prescribed fee for each inspection. That does not cancel the member's right against you. You cannot tell a member to "go and download it from MCA". Section 17 puts the duty on the company.

The deadline clock

Section 17(1) says the company must send the documents "within seven days of the request". Rule 34 uses the same period: "within seven days of the request being made by him".

Two practical points.

The clock runs from the request, not from your discovery of it. If the email sat unread in a director's inbox for four days, those days are already gone.
The fee does not pause the clock on its face. Section 17(1) makes the sending "subject to the payment of such fees as may be prescribed", and rule 34 says "on payment of fee". The two texts do not spell out what happens when the member delays paying. The safe course is to quote the fee in your first reply and send the documents within seven days of the request. If the member has not paid, keep a record that you asked.

The exact fee figure is not stated in section 17 or in rule 34. Confirm the current prescribed figure before you quote it, and do not invent a number or charge more than the rules allow.

The penalty if you miss it

Section 17(2) is blunt. If the company "makes any default in complying with the provisions of this section", then "the company and every officer of the company who is in default shall be liable for each default, to a penalty of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less."

Read that carefully.

The penalty is ₹1,000 per day. It stops growing at ₹1 lakh, because the lower of the two figures applies.
It falls on the company and on every officer in default. An officer in default can be a director or company secretary who was responsible. This is not just the company's problem.
Section 17(1) lists three documents. A reply that leaves out one of them is, on the plain words, not full compliance with the section.

At ₹1,000 a day, the ₹1 lakh ceiling is reached after 100 days of default.

Smaller companies

Section 446B of the Companies Act 2013 gives lesser penalties to a One Person Company, small company, start-up company or Producer Company. The text of that section has been proposed for amendment, so the exact relief available on the day you default needs checking. If your company is in one of these categories, ask your CA how section 446B applies to a section 17(2) default before you rely on it.

Step by step: how to answer the request

Acknowledge in writing. Reply to the member by email the same day. Say that the company will send the documents and by which date.
Verify the requester. Match the name and folio or depository account against the register of members. Section 2(55) governs who counts.
Collect the right documents. The current MoA, the current AoA, and any section 117(1) agreement or resolution not already built into them. Check the company's own file of special resolutions.
Check they are the latest. If the articles were altered by special resolution under section 14(1), the copy you send must show the alteration.
Sort out the fee. Quote the prescribed amount, after confirming the current figure.
Send within seven days. Section 20(2) of the Companies Act 2013 lets a document be served on a member by post, registered post, speed post, courier, delivery at the member's address, or "such electronic or other mode as may be prescribed". A member may ask for a particular mode and "shall pay such fees as may be determined by the company in its annual general meeting".
Keep proof. Save the request, your reply, the fee receipt and a dated record of dispatch.
Tell the board. Put the request and the reply in the next board meeting's notes.

What not to do

Do not say "it is confidential". The memorandum and articles bind the company and its members as if each had signed them (section 10(1), Companies Act 2013). They are not private papers hidden from the people they bind.
Do not send an outdated version. A copy of the articles that omits a later alteration is an incomplete response.
Do not leave out the section 117 resolutions. The memorandum and articles alone are not the full list in section 17(1).
Do not make the member prove a reason. Section 17 does not make the right depend on a stated purpose. It says "on being so requested by a member".
Do not let it sit. The penalty runs per day of default.
Do not alter the documents in a hurry to make them look tidy. The articles can only be altered by special resolution (section 14(1), Companies Act 2013).

What to do now

Next step: Confirm the requester is on the register of members. Gather the current MoA, AoA and any section 117(1) resolutions or agreements not built into them. Reply in writing. Quote the prescribed fee after confirming the current prescribed figure.
Deadline: Send the documents within seven days of the request (section 17(1), Companies Act 2013; rule 34, Companies (Incorporation) Rules 2014).
Consequence of missing it: A penalty of ₹1,000 per day of default, capped at ₹1 lakh, on the company and on every officer in default (section 17(2), Companies Act 2013). Smaller company categories should check section 446B, which may reduce the penalty.

Have a CA review your facts before you act or file.

FAQs

1. Can the company refuse because the shareholder holds very few shares?

Section 17(1) speaks of "a member". It does not set a minimum shareholding. If the person is a member under section 2(55), the right applies.

2. Is a hard copy required, or is an email enough?

Section 17(1) says "send to him ... a copy". It does not say paper. Section 20(2), Companies Act 2013, lists the modes for serving a document on a member, including post, courier and "such electronic or other mode as may be prescribed". Check the prescribed electronic modes, use the mode the member asked for if you can, and keep proof of dispatch.

3. Does section 17 cover the company's financial statements or minutes?

No. Section 17(1) lists only the memorandum, the articles, and the section 117(1) agreements and resolutions not already embodied in them. Other rights, such as copies of accounts, come from other sections of the Act, and you should look at those separately.

4. The shareholder says they never got the documents, but we sent them. What now?

Your proof of dispatch is the answer. Keep the dated email, the attachments and the fee receipt. If the member says the documents were incomplete, check them against the three items in section 17(1).

5. Who is "an officer in default" for the ₹1,000 per day penalty?

Section 17(2) makes "every officer of the company who is in default" liable along with the company. Which individual that is depends on the facts. The company secretary or the director who handled the request is a likely candidate. Your CA can tell you how the Act's wider definitions apply to your company.

6. Can the member just get the documents from the MCA portal instead?

A member may do so, as section 399(1)(a) lets any person inspect documents filed with the Registrar on payment of the prescribed fee. That is the member's choice. It does not release the company from its own duty under section 17.

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