Change in Object Clause

The object clause of the company states the purpose for which the company is incorporated. In case, company want's to change the object after incorporation, the Memorandum of Association (MOA) would have to be amended as per Companies Act, 2013.

Package Inclusion

  • Board Resolution
  • Conduct EGM
  • Special Resolution
  • Filing of Form MGT-14 with ROC

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What is MOA - Memorandum of Association

Memorandum of Association (MOA) of any Company is the foundation of any company which is being incorporated. MOA is the constitution of the Company as well it defines the scope of powers and rights within which a Company operates. Provisions of Law prevail in case there is any conflict between the Companies Act and Clauses in Memorandum.

Objects are the part of Memorandum that defines the objectives of the Company for which it is being formed. The Company cannot operate beyond its object clause. In any scenario, no company can act against the provisions of its Memorandum, and if it does so, such transaction will be ultra vires and hence void. In case the Company enters into a contract, any arrangement or agreement with any third party, such Memorandum is used as a public document.

Memorandum of Association must be made as per the format is given in Table A-F of schedule I of Companies Act 2013. Following Table are used for different kind of companies depending upon its status such as:

  • Table A

    MOA of Companies limited by shares.

  • Table B

    MOA of the Companies limited by guarantee and have no share capital.

  • Table C

    MOA of the Companies limited by guarantee but have share capital.

  • Table D

    MOA of the Unlimited Companies.

  • Table E

    MOA of the Unlimited Companies and having share capital.

Contents of MOA

MOA of the Company consists of the following clauses:

  • Name Clause

    This is the first clause in every MOA that shall mention the name of the Company with the last word as Private Limited, Limited, OPC Private Limited depending upon the type of Company. Such requirement needs not to be fulfilled by Section 8 Company.

  • Registered Address Clause

    It is the clause that mentions the name of the state where the Company's registered office is situated.

  • Object Clause

    It specifies the objects for which the Company is incorporated.

  • Liability Clause

    It specifies the limited or unlimited liability of the members.

  • Capital Clause

    This is the last clause that mentions the Capital of the Company. Authorized Capital divided into such number of shares shall be mentioned by the Company under this clause. Authorized Capital is the amount up to which the Company can raise the fund.

What is Object Clause in Memorandum of Association of Company?

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:

  • Main Activity, and
  • Activities ancillary to main business

The Company is prohibited from carrying on the business outside the scope of its objects. In this article, we are going to discuss the object clause and the procedure for its amendment to conduct the business other than the mentioned objects in its MOA.

Reason 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.

The Process to Amend Object Clause of Company’s MOA

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:

  • Hold 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.

  • Conduct EGM

    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.

  • ROC Filling

    After passing the Special Resolution, Company has to file the resolution passed for alternating object clause in MOA with concerned Registrar in from MGT-14along with prescribed fee within 3o days of passing such resolution. Following attachments shall be annexed with the form:

    • Notice of EGM

    • CTC of Special Resolution

    • Altered MOA

    • CTC of 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.

Frequently Asked Questions

Following key-points to be remembered:

  • 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.

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