Accounts & Compliance

A change in the object clause of a company represents a fundamental alteration in its core purpose and activities. The object clause, a crucial component of a company’s memorandum of association, outlines the primary objectives for which the company was initially formed. When considering a change in the object clause, it signifies a strategic shift in the company’s focus, allowing it to adapt to evolving business landscapes or capitalize on new opportunities.

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Changes in Object Clause

This process is not undertaken lightly, often requiring approval from shareholders and adherence to regulatory guidelines. Companies may seek to change their object clause for various reasons, such as diversification into new business lines, expansion into different markets, or responding to changing industry dynamics. The change in the object clause reflects the company’s forward-thinking approach and its ability to remain agile in the face of economic and market shifts.

It’s important for companies to communicate such changes transparently to stakeholders, highlighting the rationale behind the amendment and its potential impact on the company’s operations and strategic direction. Successfully navigating a change in the object clause requires a comprehensive understanding of legal and regulatory requirements, making it imperative to engage professional services to ensure a smooth transition and compliance with all necessary procedures.

What is MOA – Memorandum Of Association

Memorandum of Association (MOA) of any Company is the foundation of any company which is being incorporated. MOA is the constitution of the Company as well it defines the scope of powers and rights within which a Company operates. Provisions of Law prevail in case there is any conflict between the Companies Act and Clauses in Memorandum.

Objects are the part of Memorandum that defines the objectives of the Company for which it is being formed. The Company cannot operate beyond its object clause. In any scenario, no company can act against the provisions of its Memorandum, and if it does so, such transaction will be ultra vires and hence void. In case the Company enters into a contract, any arrangement or agreement with any third party, such Memorandum is used as a public document.

Memorandum of Association must be made as per the format is given in Table:

Contents of MOA

MOA of the Company consists of the following clauses:

• Name Clause – This is the first clause in every MOA that shall mention the name of the Company with the last word as Private Limited, Limited, OPC Private Limited depending upon the types of Company. Such requirement need not to be fulfilled by Section 8 Company.
• Registered Address Clause – It is the clause that mentions the name of the state where the Company’s registered office is situated.
• Object Clause – It specifies the objects for which the Company is incorporated.
• Liability Clause – It specifies the limited or unlimited liability of the members.
• Capital Clause – This is the last clause that mentions the Capital of the Company. Authorized Capital divided into such number of shares shall be mentioned by the Company under this clause. Authorized Capital is the amount up to which the Company can raise the fund.

What is Object Clause in Memorandum of Association of Company?

A detailed list of activities to be performed by the Company after it is incorporated is mentioned in Object Clause of Memorandum of Association. Activities to be performed by the Company included in the object clause consist of two parts:

• Main Activity
• Activities ancillary to main business

The Company is prohibited from carrying on the business outside the scope of its objects.

The Process to amend Object Clause of Company’s MOA

In case the Company wants to carry on the business which is not mentioned in its object clause shall first get it amended to add the additional objects following the secretarial procedure:

• Hold The Bold Meeting

Send the notice of 7 days to hold the Board Meeting to discuss the following agenda:

1. Take the approval of directors to amend the object clause of Memorandum.
2. Fix the date, time and venue to call the Extra-Ordinary General Meeting to get an approval of shareholders for change in object clause.
3. Approve the notice of EGM along with agenda to be discussed and an explanatory statement as per section 102 of Companies Act 2013.

• Conduct EGM

Take the approval of shareholders by a special resolution passed in duly conducted EGM. Such resolution shall be passed by the three-fourth of the majority. In the case of listed companies after passing the resolution, the Company shall send a copy of the resolution and as preceding details to the stock exchange where its shares are listed.

Special Resolution shall be passed by Postal Ballot in following cases of companies:

1. A company with more than 200 members.
2. A company has such money which remains unutilized that was raised through the issue of prospectus.

• ROC Filing

After passing the Special Resolution, Company has to file the resolution passed for alternating object clause in MOA with concerned Registrar in form MGT-14 along with prescribed fee within 30 days of passing such resolution. Following attachments shall be annexed with the form:

1. Notice of EGM
2. CTC of Special Resolution
3. Altered MOA
4. CTC of Board Resolution passed

• Approval By ROC

On receipt of the application, Registrar shall scrutinize the same. Upon satisfaction of the correctness of an application, it shall approve the alteration and certify the registration within 30 days of filing a Special Resolution.