Can Change in object clause of Private Limited Company After Incorporation?
Running a company is the most responsible job that one has on its shoulder, and in today's dynamic world wherein, it's just not about survival, it's about staying ahead and facing the completion on the face on daily basis. It's not uncommon to extend the horizon and consequently, this leads to a change in object clause of the company. Yes pursuant to the applicable rules and regulation of the Companies Act 2013, the object clause can be changed of a company.
A company has namely 5 clauses in its AOA (Article of Association) as follows:
- Name clause
- Registered office clause
- Object Clause
- Liability clause
- Capital Clause
An object clause in the company defines the main business activity and also the incidental objects of the company which it is going to deal in, after incorporation. Changes are to be effected in each clause if required.
To change the Object clause following is the procedure:
- Conduct a Board meeting
- >Call for EGM by issuing Notice for EGM, to get the approval of shareholders by passing a special resolution in the EGM.
- Hold the EGM and pass a special resolution.
- File the resolution copy within 30 days to ROC in MGT-14.
- The registrar shall take note of object change and incorporate the same in the object clause and issue the certificate of incorporation.
Procedure of Change in Object Clause of Private Limited Company
1. Board meeting
The board meeting is required to be conducted for the purpose of approval of a change in object clause. Firstly the notice is required to be sent to board members notifying about the Board meeting. It must be kept in the mind that the board meeting should be called by giving at least 7 days notice.
In the board meeting the Board resolution pursuant to the following purpose is to be passed:
- To approve the change in object clause and
- To call an EGM to get the shareholder’s approval for change in object clause.
2. Extraordinary Meeting
After the Board Resolution, the company is required to is to issue a notice of Extraordinary Meeting to all Members, Directors and the Auditors of the company pursuant to the provisions of Section 101 of the Companies Act, 2013.
Contents of Notice
- The date of EGM,
- The time of EGM and
- The venue of the EGM.
The notice shall be sent along with the explanatory statement. The explanatory statement shall state the reasons for the change in object clause along with the Interest of the director in the resolution if any should be disclosed in the explanatory statement.
Note that Notice for EGM is required to be issued at least 21 clear days before the EGM.
3. Special Notice
Shareholders approval is very important for the purpose of change of the object. In the Extraordinary General Meeting, the company shall pass the necessary Special Resolution pursuant to section 13(1) of the Companies Act, 2013, for change in object clause of Memorandum.
4. Form MGT-14
The special resolution passed at the EGM shall be filed with the Registrar within 30 days of passing the resolution. The MGT-14 contains the following details about the special resolution passed:
Attachments of MGT-14
- Certified copy of the resolution
- Explanatory statement to the notice
- Notice of Extraordinary General Meeting (EGM)
- Altered Memorandum of Association
5. Changed incorporation certificate
The registrar shall scrutinize the MGT-14 form and the Registration of change in object clause by the Registrar is done and a new certificate of registration is provided within 30 days of filing the special resolution with the registrar.
Keep in mind the following
- That pursuant to the section 13(10), no alteration made under this section shall have any effect until the change in the object clause of private limited company has been registered in accordance with the provisions of this section.
- While scrutinizing the from MGT-14 and altering the object the registrar may ask for the adoption of the new MOA and AOA in accordance to the Companies Act 2013 pursuant to section 6, whereby it states that the MOA, AOA, Resolution passed should not be repugnant to the act otherwise shall become void. The deviation in old and new MOA or AOA could be due to the change in the Act itself, any notification or amendment brought in etc.
The old act consisted of 5 Clauses and the new act consist of only two clause that is the main object and the matters necessary to achieve the main object.
The instruction may certain to amend the clause, delete the certain clause, adopt certain modification into it, or simply to adopt the new set of AOA.
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