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Change in Main Object of Company

Object clause mentioned in Memorandum of Association of a company explains main business activity of the company. A company may want to change its main object or the ancillary objects subsequently. We are available to help you to add more activities or make amendments to the companies’ main objective.

Change in object of a company

A detailed list of activities to be performed by the Company after its incorporation is mentioned in the Object Clause of the Memorandum of Association. Activities to be performed by the Company included in the object clause consist of two parts:

  • The main activity of the business, and
  • The activities ancillary to the main activity of the 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 or amend its object clause:

  • 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 through 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.

List of Documents for change of Object of the MOA

S.NoA. Documents of Directors/Shareholder
1.
Current Certificate of Incorporation
2.
MOA and AOA in Word Format
3.
List of Directors and Shareholders
4.
Proposed Main Object of the Company
5.
Digital Signature of the Authorised Director
6.
Letterheads (approx 10) and rubber stamp of director

Procedure to change the object clause of the MOA of the company

1: Pass board resolution

Pass a resolution at the board meeting to approve the object clause. A director or the Company Secretary of the company will be authorised in the meeting to sign, certify and file the required forms with the RoC. Also, the Board of Directors will fix a day, time and venue of Extra Ordinary General Meeting of members.

2: Special resolution in EGM

In the EGM, a special resolution will be passed by the members. Specific clause in passing special resolution If a company has raised funds from the public by issuing prospectus and possesses some unutilised funds out of those, it has to make some disclosures along with passing a special resolution.

  • The special resolution of the members will be obtained by postal ballot. A notice will be issued to the members which will contain the details –
    1. Total money received (from public by issuing prospectus)
    2. Total money utilized for the objects stated in the prospectus
    3. Unutilized money out of the total money received by issuing prospectus
    4. Details for the proposed change in the objects
    5. Justification for the change in the objects
    6. Amount proposed to be utilized for the new objects
    7. Estimated financial impact of the proposed change on the earnings and cash flow of the company
    8. Other relevant information
    9. The place from where a person interested can obtain a copy of the notice of resolution to be passed.
  • The special resolution will be published in the newspapers (one in English and one in vernacular language) in the city where the registered office of the company is located.
  • SR will also be placed on the website of the company.
  • Dissenting shareholders (who vote against the decision of object clause) will be given an opportunity by the promoters and other shareholders to exit.

If the company hasn’t received any funds from the public, or the funds received are fully utilised, then the company is not required to make the disclosures, only the special resolution would be enough.

3: MGT-14 to be filed with RoC

Once the special resolution is passed at the EGM, the authorised director or the company secretary will file Form MGT-14 with the RoC. Along with MGT-14, other documents to be filed are–

  • Certified copy of the special resolution
  • Notice of Extra Ordinary General Meeting (EGM)
  • Explanatory statement to the notice
  • Altered Memorandum of Association

4: Issuance of fresh certificate of incorporation

After receiving MGT-14, the RoC will examine the form, and if they are satisfied, they will register the change in object clause by issuing a fresh certificate of incorporation. Object clause change is not completed until the RoC issues a fresh certificate of incorporation.

5: Incorporating object clause in MoA and AoA

Once the certificate of incorporation is received from the RoC, the object clause must be incorporated in all the copies of Memorandum of Association.