Change in the object clause of the company

Change in the object clause of the company

Object clause mentioned in Memorandum of Association of a company defines the main business activity of the company (primary object) and Activities which are necessary for conducting the main business activity (Ancillary objects) a company can change its primary object or the ancillary objects by following the steps given below:

Step 1: Board resolution

A company shall pass a resolution at the board meeting to approve the change of object clause. A director or the Company Secretary of the company is authorized in the meeting to sign, certify and file the required forms with the Registrar of companies (ROC) and the Board of Directors shall also fix a day, time, and venue of Extraordinary General Meeting (EGM) of members.

Step 2: Special resolution in Extraordinary General Meeting (EGM)

In the EGM, a special resolution shall be passed by the members of the company. A specific clause in passing special resolution If a company has capital from the public by issuing a prospectus and still has some unutilized funds out of those, it has to make disclosures along with passing a special resolution.

1. The special resolution of the members shall be passed by postal ballot and notice shall be issued to the members which will contain the details –
   • Total amount received by the company from the public by issuing a prospectus.
   • Total amount utilized by the company for the objects stated in the prospectus.
   • Unutilized amount out of the total amount received by issuing a prospectus.
   • Details for the proposed change in the objects.
   • Justification for the change in the objects.
   • Amount proposed to be utilized for the new objects.
   • The estimated financial impact of the proposed change on the earnings and cash flow of the company.
   • Other relevant information.
   • The place where a person interested can obtain a copy of the notice of resolution to be passed.

2. The special resolution shall be published in the newspapers (one in English and one in vernacular language) in the city where the registered office of the company is located.
3. A special resolution shall also be placed on the website of the company.
4. Dissenting shareholders shall be given an opportunity by the promoters and other shareholders of the company to exit.

In case the company hasn’t raised any amount from the public, or the amount received is fully utilized, then the company is not required to make the disclosures, only the special resolution would be enough.

Step 3: Form MGT-14 to be filed with Registrar of companies (ROC)

After passing a special resolution is at the extraordinary general meeting (EGM), the director or the company secretary (CS) is required to file Form MGT-14 with the Registrar of companies (ROC) along with the documents given below:

• Copy of special resolution(SR)
• Notice of Extraordinary general meeting (EGM)
• The explanatory statement to the notice
• Altered Memorandum of Association(MOA)

Step 4: Issuance of fresh certificate of incorporation

After receiving Form MGT-14, the Registrar of Companies (ROC) will scrutinize the form, and if they are satisfied, they will register the change in object clause by issuing a fresh certificate of incorporation.

Step 5: Incorporating object clause in Memorandum of Association (MOA) and Article of Association (AOA)

After receiving a certificate of incorporation from the Registrar of companies (ROC), the object clause shall be incorporated in the Memorandum of Association (MOA).