The object clause of the company states the purpose for which the company is incorporated. Change in Object clause of the Company involves alteration of MoA. One of the main reasons companies update or change their objectives is to accommodate a transition into new ventures and fields.
Only 3 steps to follow
Let us know the changes to be done
We will classify and draft the amended MoA
Change in Object Clause
The MoA contains the object clause. The Company cannot operate beyond its object clause. To change the objectives of your business, you need to amend the Memorandum of Association.
What is object clause in MoA??
A detailed list of activities to be performed by the Company after it is incorporated is mentioned in object clause of Memorandum of Association. Activities to be performed by the Company included in the object clause consist of two parts:
1. Main activity
2. Activities ancillary to main business
The Company is prohibited from carrying on the business outside the scope of its objects.
Reasons to amend Object clause
The following can be the various reasons for which Company alter its object clause, which may or may not be the same:
The Company may want to carry on its business on a larger scale by enhancing the scope of its activities.
To attain the goals already set by the Company by new or improved methods.
To carry on such additional business that can easily be combined with the existing business of the Company.
To sell or dispose of the part of the business which can alter the structure of the business.
In case the Company is getting amalgamated or combined with other companies, it needs to expand its existing objective.
Process to change object clause
In case the Company wants to carry on the business which is not mentioned in its object clause shall first get it amended to add the additional objects following the secretarial procedure:
Conduct The Board Meeting
Send the notice of 7 days to hold the Board Meeting to discuss the following agenda:
• Take the approval of directors to amend the object clause of Memorandum.
• Fix the date, time and venue to call the Extra-Ordinary General Meeting to get an approval of shareholders for change in object clause.
• Approve the notice of EGM along with agenda to be discussed and an explanatory statement as per section 102 of Companies Act 2013.
Take the approval of shareholders by a special resolution passed in duly conducted EGM. Such resolution shall be passed by the three-fourth of the majority. In the case of listed companies after passing the resolution, the Company shall send a copy of the resolution and its preceding details to the stock exchange where its shares are listed. Special Resolution shall be passed by Postal Ballot in following cases of companies:
• A company with more than 200 members.
• A Company has such money which remains unutilized that was raised through the issue of prospectus.
After passing the Special Resolution, Company has to file the resolution passed for alternating object clause in MOA with concerned Registrar in from MGT-14 along with prescribed fee within 30 days of passing such resolution. Following attachments shall be annexed with the form:
• Notice of EGM
• Special Resolution
• Altered MoA
• Board resolution passed
Approval By ROC
On receipt of the application, Registrar shall scrutinize the same. Upon satisfaction of the correctness of an application, it shall approve the alteration and certify the registration within 30 days of filing a Special resolution.
1. What are the key points for a better understanding of MOA?
Company is permitted to subscribe through an agent
Minor cannot sign the subscription sheet in MOA and shall be signed by a guardian who is acting on his behalf.
It is upon the discretion of the Company to add any further additional points other than those mentioned provisions.
2. What are the Articles of Association and Memorandum of Association?
These are documents that every Company must possess which defines the scope, rules, objectives, vision and mission of the organisation. They also contain details regarding all the shareholders and directors of the company, and are integral documents that every Company must have.
3. What is Memorandum of Association?
A Memorandum of Association (MoA) represents the charter of the company. It is a legal document prepared during the formation and registration process of a company to define its relationship with shareholders and it specifies the objectives for which the company has been formed. The company can undertake only those activities that are mentioned in the MoA. As such, the MoA lays down the boundary beyond which the actions of the company cannot go.
4. What are the contents of a MoA?
Name Clause Registered Office Clause Object Clause Main Objective Incidental Objective Other objectives Liability Clause Capital Clause
5. When will the changes made to the object come into effect?
The changes made to the objectives will be effective only after the Registrar of Companies receives, accepts and acknowledges the application made. After the receival of their receipt, the company has the right to carry on the updated activities.
6. Do we have to change the name of the company because we are altering the objectives of our company? Do these both go hand in hand?
No, both of these are not interdependent. You do not have to change the name of the company in every case. However, if the present name, in no way reflects the new activities undertaken by the company, the Registrar of Companies may request the business to change the name of the company so that it has some relations to the new activities performed by the business.
7. What are the additional points for Public Company to alter its object clause?
In case the Company decides to alter its object clause is a Public Limited company, shall follow these additional points as well:
Special Resolution passed shall be published in the newspaper (English & Vernacular language)
Such a newspaper must be in wide circulation is that state where the registered office of the Company has to be situated.
The Company shall also place such information relating to MOA alteration on its website.
Dissenting shareholders who don't agree to the alteration of the Object clause shall be given an exit option.