A Guide to Amending the Object Clause
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Overview
An object clause of Memorandum of Association of any Company outlines the activities which the Company intends to undertake. If any Company wants to pursue any other business which is not stated under object clause, then such companies are required to comply with the provisions prescribed under Companies Act, 2013.
What is object Clause
An object clause of a Memorandum of Association sets out the purpose for which the Company is formed. It is bifurcated into two parts:
Clause 3 (a): The objects to be pursued by the company on its incorporation: It specifies the main activities that a company will carry on.
Clause 3 (b): Matters which are necessary for furtherance of the objects specified in clause 3(a): It specifies those activities which are necessary or incidental to fulfil objects given in clause 3(a).
Types of alteration in object clause
- Addition in existing clause: This refers to a situation when the Company wants to add more objects into the clause. It can be understood with an example. Suppose, a Company has mentioned three activities in the object clause, then Company can add number of activities that will result into addition in existing clause.
- Deletion in existing clause: As name suggests, this means an alteration in object clause by removing any existing activity of the Company.
- Modification in existing clause: This is alteration in object clause by modifying alteration in existing business activities.
Procedure for change of object
- Conduct Board Meeting in accordance with provisions of section 173 of Companies Act, 2013 read with Secretarial Standard 1 on Board Meetings to consider the change in object of the Company.
- After obtaining assent of the board members, call for a general meeting for approval of members to alter object clause inter alia alteration in Memorandum of Association.
- Dispatch notices for calling an Extra Ordinary General Meeting (EGM)/ Annual General Meeting (AGM) to all the members in accordance with provisions of section 101 of Companies Act,2013 read with Secretarial Standard 2 on General Meetings.
- Accord approval of Members through Special Resolution at Extra Ordinary General Meeting (EGM)/Annual General Meeting (AGM) for object change and alteration in Memorandum of Association.
- File eForm MGT-14 to submit special resolution with the Registrar of Companies.
- The Registrar shall register the alteration of the memorandum with respect to the objects of the company and certify the registration within a period of thirty days from the date of filing of the special resolution.
- Post approval of MGT-14, Company should ensure to arrange print for new copies of Memorandum of Association to give effect to the altered object.
In conclusion, altering the object clause in MOA involves a formal procedure which must be complied with to ensure legal integrity. Our services provide you with:
What is included in this
FAQs
Yes, Memorandum of Association is the primary document of the Company which specifically states the objects under “Object Clause”. It is mandatory to alter MOA for changing object of the Company.
E form MGT 14 is filed in case of change of object of the Company.
Yes, there are restrictions on change in object as given in Companies Act, 2013, few are given below:
If any company has raised money from public through prospectus and still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through prospectus unless a special resolution is passed by the company:
- Resolution is required to pass through postal ballot in accordance with section 110 of Companies Act, 2013.
- Company is required to publish an advertisement in English and vernacular language in circulation at the place where the registered office of the company is situated.
- Advertisement should include justification for change in object, etc.
Yes, the Company is required to print new Memorandum of Association to reflect object change. Further if the Company is regulated under any other act, then prior approval will be required for such alterations.
No, the power to alter the object of the Company vests with the shareholders of the Company.
In case the Company that decides to alter its object clause is a Public Limited Company, it shall follow these additional points as well:
- Special Resolution passed shall be published in the newspaper in both English and Vernacular language.
- The newspaper must have wide circulation in the State where the registered office of such Company is located. The Company shall also place 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.
