Procedure to Change in Object Clause as per Companies Act

Procedure to Change in Object Clause as per Companies Act


Are you looking for the procedure to change in object clause as per companies act? If yes, you have come to the right place. In this article, we are going to describes the procedure for change in the object clause of the MOA.

What is the object clause of the memorandum of the company?

The object clause defines the main business activity of the company. The detailed information list of activities the company is going to pursue after its incorporation. The object  clause can be bifurcated into a two- part main object and ancillary object. The ancillary object shall help in the conduct of the main objects of the company or are necessary for the conduct of the main objects.

Following are the steps for changing in object clause as per the companies act;

For change f object clause of Memorandum of Association, approval from shareholders of the company is required in the form of special resolution passed in general meeting of the company. Step by step procedure for changing of object clause of company is explained.

Step 1: A meeting of Boards of Directors is convened by issuing notice to call board meeting in accordance with the provisions of companies Act, 2013. At the Board Meeting few resolutions regarding change of object are passed which includes in principle approval of the Board of Directors to change object of company, fix date of Directors to change Object Clause of the Company with agenda and explanatory statement and authorizing Director or company Secretary of the company to issue notice of General Meeting.

Step2: The second step after board resolution is to issue notice of extraordinary meeting to all members, Directors and the Auditors of the company in accordance with the provisions section 101 of the companies 2013.

The notice contains the date, time and venue of the ECM. The notice will be accompanied by  an explanatory statement detailing the reasons for change in object clause. Interest of the director in the resolution should be disclosed in the explanatory statement.  The notice shall be issued at least 21 clear days before the EGM.

Step 3: Hold the explanatory meeting at the time, place and venue as given in the notice and to pass the necessary special resolution under section 13 (1) of the companies Act, 2013, for change in object clause of Memorandum.

For following classes of the companies shall pass a Special Resolution by Postal Ballot only;

Companies those who having more than 200 employees and a company who have the unutilized money raised through the prospectus.

Step 4: Once the necessary special resolution passed in at the EGM, the company needs to file the resolution with the registrar within 30 days of passing the resolution. From MGT-14 is required to be filled the resolution with the registrar. From MGT- 14 contains details about the special resolution passed.

Attachment with the form of MGT-14:

  • Certified copy of the special resolution along with the explanatory statement.
  • Notice of the meeting.
  • Copy of altered Memorandum of Association.

Step 5: Registration of change in object clause of registrar.

As per section 13 (10), no alternation made under this section shall have any effect until it has been registered in accordance with the provisions of the section.

As per section 13 (9) The registrar shall registrar any alternation of the Memorandum with respect of the objects of the company and certify the registration within a period of 30 days from the date of filling of the special resolution in accordance with the clause of sub section (6) of this section

Hence once, from the MGT- 14 is filled, the registrar will examine the form and register the change in the object clause by issuing a new certificate of incorporation.

Small Restriction regarding change in object clause of memorandum;

A company, has raised money from public through prospectus and still has any utilized amount out of the company so raised, shall not change in objects for which is raised the money through prospectus useless a special resolution is passed by the company-

  • Prescribed details in respect of special resolution shall also be published in the newspaper which is circulation at the place where the registered office of the company is located and shall be placed on the website of the company, if any, indicating therein the justification for such change.
  • The dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the securities of the exchange boards.

As per rule 32 incorporation rules, 2014, this special resolution under section 18 is to be passed through Postal Ballot.

Things to remember

  • No alternation in the Memorandum shall have any effect until it has been registered in accordance with provisions of the companies Act 2013.
  • The additional business must not be inconsistent with the existing business of the company.
  • The business must not be inconsistent with the existing business of the company.
  • The business may be wholly different but should not be capable of being conveniently and advantageously continued with the existing business.
  • Alternation cannot go beyond the extent required to enable the company to do any of things specified in clauses (a) to (g) of section 17 of the companies act, 1956.
  • Alternation cannot be made for abandonment of an object of a fundamental character.
  • Alternation cannot be made allowed in respect of additional   powers which the company has not responsible intention of using in the near future except under very special circumstances.

Final Say:

I hope now you understand the procedure of changing object clause as per companies act. Still, if you are facing issue while changing the object in the company, you can take us our help. Unilex business consultant will support you regarding change the object in the company. Feel free to contact us anytime and share your queries with our professional anytime.