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Change in Object Clause

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    Change in Object Clause

    The Object Clause is one of the 6 clauses a Company’s Memorandum of Association contains. Its purpose is to define the primary business activities of a Company. The company is restricted to conduct only those activities which are mentioned in the Object Clause. So, to expand and alter the scope of its activities, a company will have to first change the object clause of its MOA. Understanding the process of changing the Object clause is thus, quite crucial in this context.The Object Clause is one of the 6 clauses a Company’s Memorandum of Association contains. Its purpose is to define the primary business activities of a Company. The company is restricted to conduct only those activities which are mentioned in the Object Clause. So, to expand and alter the scope of its activities, a company will have to first change the object clause of its MOA. Understanding the process of changing the Object clause is thus, quite crucial in this context.

    Section 4(c) of the Companies Act, 2013 (hereinafter, CA, 2013) states that the memorandum of a company states the object for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof. Alteration for the memorandum is given in Section 13. It states that a company can alter provisions of the MOA by special resolution.

    Procedure for Change in Objects of a Company

    • Step 1- Board Meeting
      To consider and approve alteration of MOA (Memorandum of association).
      Determine a day, date, time, and agenda for passing a special resolution to give effect to the change.
      Approve draft notice for the general meeting along with an explanatory statement giving reason behind passing the special resolution.
      Authorize CS or any other officer to issue notice of the general meeting under the authority of the Board to every member.
      Authorize CS or CFO or any other director of the company to file the requisite form with ROC.
    • Step 2- Time Bound Disclosures
      In compliance with Regulations 30 and 46(3) Of the SEBI (LODR) Regulations, 2015, a listed company has to disclose the outcome of the board meeting with the stock exchange (where stocks are listed) as soon as reasonably practicable but within 24 hours of the conclusion of the meeting and post the same within 2 working days on the website of the company.
    • Step 3- General Meeting
      Pass the resolution through Postal Ballot or hold a General Meeting to pass special resolution for alteration in the object clause of the company.
    • Step 4- Time Bound Disclosures
      In compliance with Regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015, a listed company has to disclose the outcome of the board meeting with the stock exchange (where stocks are listed) as soon as reasonably practicable but within 24 hours of the conclusion of the meeting and post the same within 2 working days on the website of the company.
      Further, Regulation 44 of the SEBI (LODR) Regulations, 2015, a listed company shall submit details of voting result to the stock exchange within 48 hours of conclusion of its general meeting.
      Format is provided by SEBI at SEBI Circular No. 8/2015 dated 04.11.2015.
    • Step 5- Form and Documents Filing
      Section 11 Read with Rule 24 of the Companies (Management and Administration) Rules, 2014 requires that the special resolution be filed along with explanatory statement with ROC within 30 days of the passing under Form MGT-14.
    • Step 6- Certificate from ROC
      As per Section 13(9)- when the ROC is satisfied with the new objects then it shall certify the registration in 30 days from date of filing the special resolution.
    • Step 7- Time Bound Disclosures
      As per regulations 30 and 46(3) of the SEBI (LODR) Regulations, 2015 – a listed company, submit the altered MOA to the stock exchanges within 24 hours of from occurrence of the event.
      Update the same within 2 working days.
    • Step 8- Post Compliances
      As per section 15(1) ensure that the alterations made in MOA are noted in every copy of the MOA.

    Frequently Asked Questions

    Why is the object clause in the MOA important for a company?

    The object clause defines the permissible business activities of a company. It outlines the scope within which the company can operate and restricts it from engaging in activities not specified. Any alteration in business activities requires a change in the object clause.

    What are the restrictions for the modification of Object Clause as per Section 13(2)?

    A Company that holds such money which remains unused which was raised by the issue of prospectus. Before altering the object clause, such Companies shall pass a resolution, and such resolution shall be displayed or published in both English newspaper and vernacular newspaper.

    What are the different provisos for Object Clause under old and new act?

    Earlier object clause comprised of 5 clauses which are now deleted under Companies Act 2013, now it has only two object clause remain in new online form SPICe 33 for MOA, such as Main Objects; and Ancillary Objects.

    Does the copy of MOA is needed to be attached with form MGT-14 while modifying the object clause in case the Company is integrated by filing SPICe forms?

    New E-form 33 is an online SPICe form for MOA of the company which is filed while integrating the Company with SPICe 32 and SPICe 34. Therefore the Company needs not to submit this online form again with form MGT-14 for certification of alteration. Having a physical copy of MOA along with MGT-14 will be enough.
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