{"id":22535,"date":"2020-12-22T12:32:25","date_gmt":"2020-12-22T07:02:25","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=22535"},"modified":"2020-12-22T12:32:27","modified_gmt":"2020-12-22T07:02:27","slug":"modifying-the-activities-of-the-private-limited-company","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/modifying-the-activities-of-the-private-limited-company\/","title":{"rendered":"Legalities Associated under Modifying the Activities of the Private Limited Company"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In this blog we would provide in-depth information on the legal aspect that needs to follow for modifying the activities of private limited company. Unlike LLP and partnership firms, the publicly or privately held organization has to remain on alert while making changes to their existing business activities. These entities are required to follow a set provision for serving such a purpose. The constitutional framework of a bigger and registered organization is governed by some mandatory documents that also include a Memorandum of Association (MOA).<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/modifying-the-activities-of-the-private-limited-company\/#Five_Clauses_of_Memorandum_of_Association\" >Five Clauses of Memorandum of Association<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/modifying-the-activities-of-the-private-limited-company\/#Legal_Procedure_for_Modifying_the_Activities_of_the_Private_Limited_Company\" >Legal Procedure for Modifying the Activities of the Private Limited Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/modifying-the-activities-of-the-private-limited-company\/#Fees_Structure_Related_to_Form_MGT-14\" >Fees Structure Related to Form MGT-14<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/modifying-the-activities-of-the-private-limited-company\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Five_Clauses_of_Memorandum_of_Association\"><\/span>Five Clauses of Memorandum of Association<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The MOA of a company essentially comprises of five clauses,\nwhich are listed below.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Name Clause<\/h3>\n\n\n\n<p>It is the primary clause of the Memorandum of Association (MOA).\nIt encloses the name of the organization. This clause was inculcated to render\nrecognition to the company.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Registered Office Clause<\/h3>\n\n\n\n<p>It reflects the location of the company where the entity has\nbeen registered.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Object Clause<\/h3>\n\n\n\n<p>Object Clause reflects the purpose of the company; meaning it\ntalks about the business activities pursued by the company.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Liability Clause<\/h3>\n\n\n\n<p>The liability clause talks about the extent of liability carried\nby the company\u2019s members, either in terms of guarantee and shares.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Capital Clause<\/h3>\n\n\n\n<p>Companies possessing share capital will demonstrate the gross\nauthorized capital which is divided into the no. of shares &amp; the amount.<\/p>\n\n\n\n<p>A Private Limited Company is not liable to pursue any business activity beyond the scope of the object clause of the MOA. After obtaining the <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>Private Limited company registration<\/strong><\/a>, if the company wishes to undertake a new stream relating to the ongoing activity or inculcate new activity, then it requires to amend the object clause in MOA.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_Procedure_for_Modifying_the_Activities_of_the_Private_Limited_Company\"><\/span>Legal Procedure for Modifying the Activities of the Private Limited Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The section below explains the generalized process for modifying\nthe activities of the private limited company. This process applies to private\nand public limited companies.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Convene a Board Meeting to Pass a Resolution&nbsp;<\/h3>\n\n\n\n<p>A convening a board meeting is the first and foremost in this\nprocess. The BODs plays the key role here as they were responsible for calling\nExtraordinary General Meeting (EGM) to avail permission from shareholders. <\/p>\n\n\n\n<p>Moreover, the Board of Directors may delegate the authority to\nany of the directors for filing the required form with the Ministry of\nCorporate Affairs. The matter of the Extraordinary General Meeting (EGM) must\nbe communicated with all the shareholders via a writ notification before 21\ndays from the date of EGM.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Passing a Special Resolution in Extraordinary General Meeting (EGM)<\/h3>\n\n\n\n<p>The company must call an Extraordinary General Meeting (EGM) at\na specified date and time. The shareholders of the company must pass a special\nresolution for making proposed changes in the object clause in MOA. For\ncompanies other than privately held entities must pass a special resolution by\nway of the postal ballot for incorporating changes in the business\nactivity.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: Filing of form MGT-14 with MCA<\/h3>\n\n\n\n<p>A company seeking changes in the existing business activities\nmust file the form MGT-14* with the Ministry of Corporate affairs. This form\nought to be filed within 30 days from the fate of resolution. The process\nreaches its completion when the company successfully obtains permission from\nthe MCA.&nbsp; &nbsp;<\/p>\n\n\n\n<p>Applicant must attach the following documents with the form\nMGT-14 during the time of submission<\/p>\n\n\n\n<ul><li>The original copy of board resolution.&nbsp;<\/li><li>Notice of Extraordinary General Meeting (EGM)<\/li><li>An original copy of the special resolution&nbsp;<\/li><li>Modified Memorandum of Association (MOA).<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Form MGT-14*<\/h4>\n\n\n\n<p>MGT-14 is required to be filed by the entity with the Registrar\nof Companies (RoC) under section 94(1) and 117(1) of the Companies Act 2013.\nPrivately held entities are not needed to file MGT-14 for matters provided in\nsection 179(3) read with rule 8 of the Companies (Meetings of Board and its\nPowers) Rules 2014.&nbsp;<\/p>\n\n\n\n<p>Meeting of the BODs are held, and resolutions are passed under the guidance of shareholders at the said meetings. The resolutions are bound to be filed with ROC by the company depending on the circumstances. MGT-14 is the form the serves the purpose of filling the resolution with ROC.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">What details are supposed to be filled in MGT-14?\u00a0<\/h4>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-details-are-supposed-to-be-filled-in-MGT-14.png\" alt=\"MGT-14\" class=\"wp-image-22536\" width=\"532\" height=\"533\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-details-are-supposed-to-be-filled-in-MGT-14.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-details-are-supposed-to-be-filled-in-MGT-14-150x150.png 150w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-details-are-supposed-to-be-filled-in-MGT-14-300x300.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-details-are-supposed-to-be-filled-in-MGT-14-768x770.png 768w\" sizes=\"(max-width: 532px) 100vw, 532px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Step 4: Alteration of MOA<\/h3>\n\n\n\n<p>The company after securing permission from the <strong>Ministry of Corporate Affairs<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/\"><strong>[1]<\/strong><\/a><\/sup> should undertake the task of altering the Memorandum of Association. The company can inculcate new activities immediately after receiving approval from the authority. Make sure to ensure conformity with all the existing provisions to avert any complications.\u00a0<\/p>\n\n\n\n<p>It&#8217;s mandatory to intimate the MCA every time whenever the board\ndecided for modifying the activities of the private limited company such as\nmoving the registered office to the new location, inculcation of a new\nundertaking, or changing the capital. Any violation of the said prerequisite\nwill be deemed as an offense and the involved parties will be penalized as per\nthe provision of the bylaws.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fees_Structure_Related_to_Form_MGT-14\"><\/span>Fees Structure Related to Form MGT-14<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The fee structure varies as per the threshold of the share capital hold by the company. Following is the tabular representation of the fee structure related to the MGT-14.\u00a0<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Fee amount<\/strong>\n  <\/td><td>\n  <strong>Share Capital<\/strong>\n  <\/td><\/tr><tr><td>\n  Rs.200\/Document\n  <\/td><td>\n  Less\n  than Rs.1, 00,00.\n  <\/td><\/tr><tr><td>\n  Rs.300\/Document\n  <\/td><td>\n  Rs.1, 00,000 \u2013 4, 99,999.\n  <\/td><\/tr><tr><td>\n  Rs.400\/Document\n  <\/td><td>\n  Rs.4,\n  99,999 \u2013 25, 99,999.\n  <\/td><\/tr><tr><td>\n  Rs.500\/Document\n  <\/td><td>\n  Rs.25, 00,000 \u2013 99,\n  99,999.\n  <\/td><\/tr><tr><td>\n  Rs.600\/Document\n  <\/td><td>\n  Rs.1,\n  00, 00,000 and above.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p>It should be kept in mind that the delay in the registration\nwill attract the penalty on the per-day basis criteria, so beware of such\nmishappening.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Decision making is a vital aspect of any organization that contributes significantly to its success. In private or public limited companies, if decision-making is directly impacting their existing activities then a legal procedure has to be followed for the same. According to bylaws, companies that run through a constitutional framework are bound to follow a correct legal procedure for modifying the activities of the private limited company.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/significance-and-advantages-of-company-registration-for-smbs\/\">\nSignificance and Advantages of Company Registration for SMBs\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this blog we would provide in-depth information on the legal aspect that needs to follow for modifying the activities of private limited company. Unlike LLP and partnership firms, the publicly or privately held organization has to remain on alert while making changes to their existing business activities. These entities are required to follow a [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":22539,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[1347],"acf":{"service_id":"1"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5853,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22535"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=22535"}],"version-history":[{"count":15,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22535\/revisions"}],"predecessor-version":[{"id":22552,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22535\/revisions\/22552"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/22539"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=22535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=22535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=22535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}