+91 7305 345 345Change in Object Clause
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Change in Object of a Company - Planning to diversify or shift your business focus? Changing your company’s object clause is crucial to legally incorporate the changes in the operational scope of your business. Our professionals handle every step from drafting resolutions and holding meetings to filing with the ROC. Ensure a smooth and legally sound transition with our expert support.
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Change in Object Clause of the Company
A company is a separate legal entity formed by a group of individuals to carry out commercial or industrial activities. It operates within the scope of its stated objectives as outlined in the Memorandum of Association (MoA). These objectives define the scope of activities the company can engage in and guide its operations.
However, as businesses grow and markets evolve, companies may need to change their primary or ancillary objectives to adapt to new business opportunities, expand operations, or enter new industries. Such changes are executed by amending the Object Clause of the Memorandum of Association (MoA). The company needs to follow a structured process in compliance with the Companies Act, 2013.
Memorandum of Association (MoA)
The Memorandum of Association (MoA) is the heart and soul of the company, which outlines its constitution. It serves as a charter for the company, defining the fundamental conditions under which it operates. The Memorandum of Association of a company includes the following clauses:
1. Name Clause:
- It specifies the name of the company.
- For a public limited company, the word “Limited” must be used at the end.
- For a private limited company, the name must end with “Private Limited.”
2. Registered Office Clause:
It mentions the state in which the company’s registered office is located, which helps in determining the jurisdiction of the Registrar of Companies (ROC).
3. Objects Clause:
- This clause states the main objectives for which the company is incorporated.
- It includes incidental or ancillary objects that support the main objectives.
- Helps in defining the scope of activities the company can legally undertake.
4. Liability Clause:
- It defines the extent of liability of the members of the company.
- In companies limited by shares, liability is limited to the unpaid amount on shares held.
- In companies limited by guarantee, liability is limited to the amount members undertake to contribute if the company is wound up.
5. Capital Clause:
- This clause specifies the company's authorized share capital.
- It includes details about the division of capital into shares of fixed denominations.
6. Association or Subscription Clause:
- This clause contains subscribers' declarations to form the company.
- It states its intention to acquire shares and become a part of the company.
7. Nomination Clause (for One Person Company):
- This clause is mandatory for One Person Companies (OPCs) only.
- It mentions the nominee who will take over in case of the sole member’s death or incapacity.
Object Clause in the Memorandum of Association of the Company
The Object Clause is one of the most vital parts of the Memorandum of Association (MoA), as it explicitly defines the scope of business activities that the company is legally permitted to undertake. The object clause consists of the following:
- Main Objects: It defines the core business activities that the company intends to carry out.
- Ancillary or Incidental Objects: It contains the activities that support the main objects of the company and help the company in achieving its main objectives.
- Other Objectives: It contains other activities that the company can engage in without being inconsistent with the main objectives.
The primary purpose of the Object Clause of the company is to prevent the company from venturing into activities beyond its stated purposes, which would be considered ultra vires (beyond powers). Anything done beyond its main objectives is termed as ‘ultra vires’, i.e., beyond powers, and is void. In certain circumstances, activities that fall outside the main objectives of the company can attract penalties, and this may even result in the company being struck off the register.
Sometimes, as a company evolves and seeks new growth opportunities, it may need to change its objectives to align with its goal of expanding its business. For this purpose, amending the object clause in the Memorandum of Association (MOA) becomes essential to accommodate these changes legally.
Reasons to Amend the Object Clause
The reasons for amending the object clause of the company can be due to a variety of different reasons, which include:
- Business Expansion
- Business Diversification
- New Projects or Methods
- Adding related activities
- Restructuring, such as mergers and acquisitions
- Removing outdated objectives
- Mergers and Acquisitions
- Adapting to Market Changes
What Cannot Be the Object of the Company?
A company cannot include any object that is illegal, against public policy, or contrary to statutory provisions:
- A company cannot have objects that involve illegal activities or actions that contravene the law of the land.
- A company cannot engage in activities that go against public policy, social and cultural norms, or moral values.
- A company is prohibited from having objects beyond its legal capacity or powers as outlined in its Memorandum of Association (MOA).
- A company cannot list gambling or betting as its objectives.
- A company cannot have unlawful business practices, fraudulent schemes, manipulation, or unfair competition as its objectives.
- A company cannot include objects that are inconsistent with its type or structure.
A company cannot include objects related to participating in political activities or supporting political parties.
Documents Required for Changing the Object Clause of the Company
To initiate the change in the Object Clause, you need the following documents:
- Special Resolution: A resolution passed by shareholders at a General Meeting that approves the changes to the object clause.
- Notice of General Meeting: A notice is sent to shareholders informing them about the proposed changes and meeting details.
- Explanatory Statement: A statement detailing the reasons for and impact of the proposed changes is included in the notice.
- Form MGT-14: A form filed with the Registrar of Companies (ROC) within 30 days after the special resolution is passed.
- Amended Memorandum of Association (MOA): A revised MOA that shows the new object clause, to be filed with the ROC.
- Board Resolution: A resolution passed by the Board of Directors authorizing the amendment and the filing of documents.
- Affidavit from Directors: An affidavit confirming compliance with legal requirements for the amendment.
- Proof of Payment of Fees: Proof of payment for the filing fees of the documents with the Registrar of Companies (ROC).
- Copy of Certificate of Incorporation: A copy of the company's original certificate of incorporation (if applicable).
- Additional Regulatory Approvals: Approval from relevant authorities, such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), for companies in regulated sectors, as required.
Procedure to Amend the Object Clause of the MOA of the Company
The process to amend the object of the company includes several steps, which are as follows:
- Step 1: In the board meeting of directors, pass a Resolution authorizing the amendment and approving the proposal to change the object clause of the company along with reasons.
- Step 2: Issue a notice to the shareholders containing the agenda and details of the proposed amendment to the object clause.
- Step 3: The company must convene a General Meeting (either an Annual General Meeting (AGM) or Extraordinary General Meeting (EGM)), where the shareholders will vote on the proposed amendment.
- Step 4: At the General Meeting, a Special Resolution with a 75% majority must be passed by the shareholders to approve the proposed amendment.
- Step 5: After the special resolution is passed, the company must file Form MGT-14 with the Registrar of Companies (ROC) within 30 days of the resolution being passed.
- Step 6: Once the object clause is amended, the company needs to file the updated MoA with the Registrar of Companies (ROC).
- Step 7: The Registrar of Companies will review the filed documents. If everything is in order, the ROC will approve the amendment and register the new object clause.
- Step 8: Once the amendment is approved, the company will receive an updated certificate of incorporation including the change in the object clause.
- Step 9: After changing the object clause of the company, it is important to update all its records, including Share Certificates, contracts, and other relevant documents, to reflect the new changes.
Deadlines and Penalties for Changing the Object Clause of a Company
|
Activity |
Deadline |
Penalty/Consequences |
|
Passing Board Resolution |
Must be passed before the General Meeting |
|
|
Sending Notice for General Meeting |
At least 21 days before the meeting date |
|
|
Holding the General Meeting and Passing a Special Resolution |
On the scheduled meeting date |
If the amendment is not passed in a special resolution, the amendment process cannot proceed. |
|
Filing Form MGT-14 with ROC |
Within 30 days from the date of passing the resolution |
A fine of ₹1,000 per day up to ₹2 lakh on the company and officers if delayed. |
|
Updating the Memorandum of Association (MoA) |
After obtaining ROC approval |
If not updated, the new object clause will not be legally valid, which can lead to non-compliance |
|
Updating Company Records and Documents |
After receiving the updated Certificate of Incorporation |
Failure to update may result in contractual complications or legal disputes. |
Why Choose Kanakkupillai?
Running a business comes with its own set of challenges, from company registration and annual compliance to managing finances. So, when you are amending the object clause of your business, you need more than a service provider. You need a partner who understands the law and your business:
- We simplify the legal process: Whenever you expand or amend your company's objects, we make the entire process clear and manageable for you.
- We take care of the paperwork, end-to-end: Legal formalities can be time-consuming and overwhelming. Our team handles everything from drafting resolutions and filing forms to coordinating with the Registrar of Companies. You do not have to worry about updates or missed steps.
- We ensure timely filings and full compliance: Missing deadlines can lead to penalties or delays in approval. With us, you will never have to worry. We stay ahead of due dates, maintain proper documentation, and keep you informed at every stage.
- Transparent pricing with no hidden charges: What we quote is what you pay. Our pricing is clear, fair, and upfront, with no hidden fees!
- Trusted by thousands of businesses across India: From startups and private companies to large enterprises, over 1,00,000 businesses have trusted Kanakkupillai for their legal and compliance needs. We bring that experience to every client we serve.
Frequently Asked Questions
What is the object clause in a company's MoA, and why is it important?
The object clause in the Memorandum of Association (MoA) specifies the activities a company can legally undertake. It defines the company’s operational boundaries and ensures that it does not engage in activities beyond its stated objectives.What is the need to change the object clause of a company?
A company may need to amend its object clause to expand into new business areas, adapt to market changes, or diversify its operations. It helps the company stay relevant and pursue new opportunities.Is changing the object clause a common practice among companies?
Yes, the practice is quite common, especially when companies evolve, merge, or diversify. Many businesses update their object clause to reflect changes in strategy or market positioning.Can any company change its object clause whenever it wants?
Yes, any company can amend its object clause, but it must follow a legal process involving shareholder approval and filing the amendment with the Registrar of Companies (ROC).What are the legal requirements for changing the object clause?
To change the object of a company, you need to pass a special resolution at a General Meeting, file Form MGT-14 with the ROC, and update the MoA to reflect the changes.What is a special resolution, and why is it necessary for this amendment?
A special resolution is a formal decision passed with at least a 75% majority vote of shareholders. It is essential for amending the object clause as it represents collective agreement among members.Are there any restrictions on what can be included in the new object clause?
Yes, the new object clause cannot include illegal, immoral, or unethical activities. It must also align with the company’s type and structure as per the Companies Act, 2013.Can the object clause be amended more than once?
Yes, a company can amend its object clause multiple times as long as each amendment follows the legal requirements and obtains the necessary approvals.What are the consequences of not updating the MoA after changing the object clause?
Any failure to update the MoA can result in non-compliance, leading to penalties and potential legal disputes. It may also affect the company’s ability to conduct new business activities.How does changing the object clause affect existing contracts and obligations?
Generally, existing contracts remain valid unless the new object clause directly conflicts with them. It is crucial to review ongoing agreements to ensure consistency.Is it possible for the ROC to reject the proposed changes to the object clause?
Yes, the ROC may reject the amendment if it finds that the changes are illegal, against public policy, or not compliant with the structural regulations of the company.What makes Us Different
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