How to Change Company object under Companies Act, 2013?

The process to change company object is given under the Companies Act, 2013. The object clause determines the list of activities performed by a company after the incorporation. It is specified in the Memorandum of Association (MOA) and any act that is carried out beyond the object and powers is called ultra-vires. The object clause is the most important clause which is decided by the subscribers of the company. The memorandum contains five clauses which are name clause, registered address clause, object clause, liability clause and capital clause. In this blog, we will be discussing the process with the form filled with ROC and reasons for the change in the object clause.

What is the Process for Change Company Object in the company?

The process for a change in the object clause of the Memorandum is as given below:

Step 1: Calling of Board meeting

For changing the object clause in the Memorandum of Association (MOA), the first step is issuing a notice for convening a meeting of the board of directors. The agenda for the board meeting of directors is as follows:

• To obtain the sanction of the board for the alteration in the object clause that is given in the MOA.
• To decide the date, time, and place for conducting the Extraordinary general meeting (EGM) and obtain the member’s consent. A special resolution is passed to change company object in the memorandum.
• To make notice of EGM with the agenda and explanatory statement must be prepared for the notice of the general meeting as prescribed under the given section of the companies act, 2013.
• The director or company secretary is required to issue the notice of an Extra-ordinary general meeting (EGM) as passed by the board.

Step 2: Issue notice for conducting an Extra-ordinary general meeting (EGM)

• The notice of the EGM must be issued to the members, directors and auditors with the provisions as the relevant section of the companies act, 2013.

Step 3: Holding the general meeting to change company object

A special resolution is passed by the members of the EGM. A specific clause in passing a special resolution is when a company raised funds from the public by issuing a prospectus and has unutilized funds, it has to make some disclosures by passing a special resolution.

The special resolution of the members will be required by postal ballot. A notice will be issued to the members containing the details –

• Total money received from the public by issuing a prospectus
• Total money used for the objects mentioned in the prospectus
• Unused money from the total amount of money received by issuing a prospectus
• Details for the proposed change company object
• Justification and reasons for the change in the objects.
• The proposed amount is used for the upcoming objects
• The estimated financial impact of the proposed change on the earnings and cash flow of the company
• Other important information
• The place where an interested person can get a copy of the notice of resolution passed
• The special resolution is published in the newspaper i.e., in English and vernacular language in the city where the registered office is situated.
• The special resolution must be placed on the website of the company
• The dissenting shareholders who can vote against the decision to change company object will be provided with an opportunity by the promoters and other members to exit.
• In case the company hasn’t received any funds from the public or the funds received are fully utilized then the company is not required to make the disclosures and the special resolution is enough.

Step 4: E-Form MGT filled with Registrar of Companies (ROC)

After the special resolution is passed at the EGM, the authorized director or the company secretary will be filing Form MGT-14 with the ROC. The other documents which are provided as attachments to the form are as follows:

• Certified copy of the special resolution
• Notice of extra ordinary general meeting (EGM) for change company object
• The explanatory statement to the notice
• Copy of Altered Memorandum of association

Step 5: Issuance of fresh certificate of incorporation

After receiving the E-Form MGT-14, the ROC will evaluate the form and documents attached thereto, and the alteration of the company object by issuing a fresh incorporation certificate.

Step 6: Incorporating object clause in MOA and AOA

After the certificate of incorporation is received by the company, the object clause is incorporated in all copies of the MOA. The company can start new business activities after receipt of approval from the Ministry of corporate affairs (MCA).

Format of Special Resolution passed in the Extra-Ordinary General Meeting

Certified Copy of the resolution passed for change company object at the Board meeting by the directors of _______________ Private limited held on _____________ at the registered office change of the company at ____________ 11.00 a.m. and concluded at 11.30 a.m.

‘Resolved that pursuant to the provision of Section 13 and other provisions of the Companies Act, 2013 and the rules made thereunder, consent of shareholders of the company be and is hereby accorded, subject to the approval of the Registrar of companies of the memorandum of association of the company

To carry on the business of ______________

Resolved further that for the given purpose of taking effect to this resolution, Mr./Mrs. (Name of the director) and (Company secretary) be and hereby authorized to change company object on behalf of the company, to do all such acts, deeds and things as necessary to sign and execute all necessary documents, applications and returns to the aforesaid resolution with the filing of Form MGT-14 for return of change in object clause with the Registrar of companies.

By order of the Board of directors

___________________ Private Limited

Director

DIN:

What are the reasons for change in business activity of a company?

The following can be the reasons for the change in the business activity of a company:

• When a company wants to expand the scope of the business activities
• When a company takes over another company with different business activity
• For change company object, when a company wants to start a completely different business
• When the government prohibits the current business activity under any law.
• The purpose of achieving the goals that are already set by improved methods
• To carry on the additional business which can be combined with the existing business of the company
• To disclose or sell the part of a business that can change the structure of the company

Conclusion

A company is authorized to conduct business activities provided in the object clause of the MOAs of the company. Any type of business outside the scope of the activities mentioned in the MOA needs to change company object is considered unlawful and beyond the powers of the company. However, companies act provides to alter the activities by adding or deleting the objects in the MOA. In this blog, we have discussed the process of alteration and change in the object clause.