{"id":23975,"date":"2021-01-12T12:19:38","date_gmt":"2021-01-12T06:49:38","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=23975"},"modified":"2022-11-16T14:04:38","modified_gmt":"2022-11-16T08:34:38","slug":"legal-consideration-for-multiple-businesses-under-one-company","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/legal-consideration-for-multiple-businesses-under-one-company\/","title":{"rendered":"Legal Consideration for Multiple Businesses under One Company"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A registered entity incorporated under the Companies Act, 2013\nis liable to maintain the specific legal documents such as AOA and MOA.\nMemorandum of Association reflects the purpose behind the establishment of the\ncompany. The scope of activities of the privately-held entity is defined by the\ncharter document of the company, viz: Memorandum of Association and Article of\nAssociation. <\/p>\n\n\n\n<p>There are times when organizations seek expansion through the\naddition of a new line of businesses. The act of expansion of the private\nlimited company is subjected to the legal obligations outlined by the Ministry\nof Corporate Affairs. This blog not only unveils the concept of adding multiple\nbusinesses under one company but also look into the legal consideration for the\nsame.<\/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\/legal-consideration-for-multiple-businesses-under-one-company\/#Object_Clause_under_Memorandum_of_Association\" >Object Clause under Memorandum of\nAssociation&nbsp;<\/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\/legal-consideration-for-multiple-businesses-under-one-company\/#Can_an_Organization_Register_for_Multiple_Businesses_during_the_Incorporation_Process\" >Can an Organization Register for Multiple\nBusinesses during the Incorporation Process?&nbsp;<\/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\/legal-consideration-for-multiple-businesses-under-one-company\/#Legal_Consideration_for_Inculcating_New_Business_Activities_in_Private_Limited_Company\" >Legal Consideration for Inculcating New Business\nActivities in Private Limited Company&nbsp;<\/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\/legal-consideration-for-multiple-businesses-under-one-company\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Object_Clause_under_Memorandum_of_Association\"><\/span>Object Clause under Memorandum of\nAssociation&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per section 4(1)(c) of the Companies Act, 2013, the Memorandum of Association (MoA) must enclose the object for which the entity is proposed to be legally incorporated. Simply put, the object clause is an imperative part of the Memorandum of Association of the company, which ought to be furnished to the Ministry of Corporate Affairs during the <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration<\/strong><\/a> process.&nbsp;<\/p>\n\n\n\n<p>The object clause encloses the detail of activities that the\ncompany is willing to undertake after being legally established. The object\nclause is typically outlined with extreme caution to avert any legal conflict\nin the future. The company cannot undertake any activities which fall beyond\nthe scope of the object clause. <\/p>\n\n\n\n<p>The violation of the object clause could lead the company to\nultra-virus activities, which in general, is perceived as an unlawful\nundertaking.&nbsp;The object clause invariably supports the concept of multiple\nbusinesses under one company, but with some few exceptions. In general, the MoA\nof the company comprises of six important clauses such as a name clause,\nregistered office clause, object clause, liability clause, association clause,\nand capital clause.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Can_an_Organization_Register_for_Multiple_Businesses_during_the_Incorporation_Process\"><\/span>Can an Organization Register for Multiple\nBusinesses during the Incorporation Process?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The answer is yes. A company is eligible to register for\nmultiple businesses under one company, however, it entirely depends on whether\nthe activities are interrelated or not. The company is eligible to undertake\nmultiple activities with the approval of the members.<strong><\/strong><\/p>\n\n\n\n<p>However, all the activities which are mentioned ought to be\nrelated to the main business of the company. Activities that are being\nconsidered as part of the main business can be carried under one canopy. In\naddition to that, such companies are also eligible to undertake ancillary\nactivities related to the main business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Understanding the Concept of Inculcating New Businesses<\/h3>\n\n\n\n<p>Suppose there is a digital marketing company whose primary\nobjective is to render PPC services to its target audience. To ensure quick\nturnaround time (TAT), the company also takes advantage of its in-house remote\naccess technology which allows them to access the client\u2019s system on the go.<\/p>\n\n\n\n<p>It\u2019s fair if the company wishes to use said technology to\naccomplish their business objective, but they cannot project it as part of\nprimary business activity unless it is mentioned in the object clause under\nMOA. Object clause voids any concept of undertaking unrelated activities within\nthe registered organization. Since remote access technology is a part of\nsoftware development services, the company stands ineligible to inculcate it in\nthe primary business activities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_Consideration_for_Inculcating_New_Business_Activities_in_Private_Limited_Company\"><\/span>Legal Consideration for Inculcating New Business\nActivities in Private Limited Company&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies working under the <strong>Companies Act, 2013<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/companies-act\/companies-act-2013.html\"><strong>[1]<\/strong><\/a><\/sup> are bound to discard all the activities that are not in line with the objective of the company. If the said entity wishes to inculcate new activities then they can opt to create the subsidiary or associate company. If the specified activity is interrelated to another then it would be categorized in the same fashion.&nbsp; So the concept of multiple businesses under one company is viable only in the situation when company incorporate the another entity.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Incorporating Subsidiary Business for Availing New Activities<\/h3>\n\n\n\n<p>Registration of the privately held entity in India can be done\nvia an online process. In Feb 2020, MCA introduced the SPICe+ form, a web-based\napplication form that replaces the previous version of the form called SPICe.\nThe new form is more intuitive and offers plenty of services under the roof,\nhence making the incorporation process easier than ever.<\/p>\n\n\n\n<p>SPICe+ form offers a plethora of services such as Name\nReservation, DIN Allotment, and Incorporation, issuance of PAN, TAN, EPFO,\nESIC, and opening of Bank account. With the SPICe+ form in place, the applicant\nis no longer required to file separates applications related to tax structure\nand bank account.&nbsp;<\/p>\n\n\n\n<p>&nbsp;<strong>SPICe+ is Bifurcated into\ntwo parts as follows:<\/strong><\/p>\n\n\n\n<p>&nbsp;<strong>1. Part A:<\/strong>&nbsp;<a href=\"https:\/\/corpbiz.io\/learning\/learn-the-process-for-the-reservation-of-company-name\/\"><strong>Name Reservation of the company<\/strong><\/a>. It can be utilized for availing permission regarding name reservation and also for filing registration for the company in one go.&nbsp;<\/p>\n\n\n\n<p>&nbsp;<strong>2. Part B:<\/strong>&nbsp;In Part B enclose the following services:<\/p>\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\/2021\/01\/In-Part-B-enclose-the-following-services.png\" alt=\"Part B: In Part B enclose the following services\" class=\"wp-image-23976\" width=\"497\" height=\"682\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/In-Part-B-enclose-the-following-services.png 728w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/In-Part-B-enclose-the-following-services-218x300.png 218w\" sizes=\"(max-width: 497px) 100vw, 497px\" \/><\/figure><\/div>\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>A successful business often comes across to a point where they\nwant to bifurcates their existing services or inculcate new activities to\nincrease their revenue. If the business is incorporated as a private limited\ncompany then adding a new line of activities becomes a matter of legal concern.\nTo serve such a purpose, the company has left with no other option than\nestablishing the new entity as per the guidelines of the Ministry of Corporate\nAffairs. The new line of activities or businesses should be reflected in the\nobject clause of the company\u2019s MOA.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Incorporating multiple businesses under one company could be a stressful journey for anyone. If you want to get rid of hindrances from all legal intricacies related to the company registration process then feel free to connect with <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz\u2019s<\/strong><\/a> professionals without any hesitation. We make sure that your application for incorporation does not encounter any hindrances from the authority by eliminating errors in the preliminary stage.<\/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\/what-are-the-requirements-before-choosing-company-name-in-india\/\">\nWhat are the Requirements Before Choosing Company Name in India?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A registered entity incorporated under the Companies Act, 2013 is liable to maintain the specific legal documents such as AOA and MOA. Memorandum of Association reflects the purpose behind the establishment of the company. The scope of activities of the privately-held entity is defined by the charter document of the company, viz: Memorandum of Association [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":23979,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[1417],"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":25352,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23975"}],"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=23975"}],"version-history":[{"count":21,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23975\/revisions"}],"predecessor-version":[{"id":50736,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23975\/revisions\/50736"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/23979"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=23975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=23975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=23975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}