Object Clause Change – Let’s do something NEW !!
Every company in this world is established with the objective to do some work and achieve success in that work. According to the Companies Act, 2013, a company can do its business activities within the ambit of its Object Clause. Object clause is the clause which is mentioned in the Memorandum of Association which determine the purpose and scope of work for which the Company operate. However, in this fast moving world, sometime it become essential for the Corporate to indulge in new business activities for its survival and getting profits and required to amend and alter its object clause. For this purpose corporate are required to follow the proper procedure as laid down under the Companies Act, 2013 and the rules and amendment made there under.
However, it is pertinent to note down here is that the practical aspects for alternation in object clause is quite different from the theoretical knowledge. So it is essential to thrown light on practical aspect also.
The complete procedure for change of object of the Company has been categorized in Two Classes:
- Legal Aspects;
- Practical Aspects.
Legal Procedure for change of Object Clause
Section 13 of the Companies Act, 2013 and the rules made there under deals with the alteration and modification of Object Clause under the Memorandum of Association. Further change of Object Clause of the Company requires the change of MOA. Being the charter document of the Company, alteration under MOA can only be made with the approval of the shareholders of the Company by passing special resolution (taking 75% approval of the Members) in a duly convened General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting. Any modification and alteration of object clause in the Memorandum of Association is to be intimated to the Registrar of Companies. Intimation is required to filed in form MGT-14 within a period of 30 days from the date of passing special resolution in theGeneral Meeting along with the necessary attachments i.e. Certified True copy of Special resolution, Amended copy of MOA and Certified True Copy of Notice of EGM.
Practical Procedure for Change of Object Clause
- Convene and Hold the Board Meeting: The Board Meeting is to be convened as per Secretarial Standard 1. Notice and agenda to be circulated at least 7 days before the meeting. Board Meeting will be held to discuss the following below mentioned matters:
- Pass the resolution for taking consent of the Board of Director, subject to approval of shareholders at General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting, for changing the object clause under MOA of the Company.
- Fix the day, date, time and venue of the General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting, and authorise any Director or any other person to send the notice of General Meeting to the Members and auditor.
- Further while issuing notice of General Meeting, provision of section 101 of the Companies Act, 2013 and the rules made thereunder shall be taken care of i.e. issue of notice of general Meeting atleast 21 clear days before the date of General meeting to:
- All the Directors;
- Auditor of the Company.
- Issue the Notice of General Meeting to the persons as mentioned in the Clause
- Convene the General Meeting: Convene General meeting as per provision of Secretarial Standard 2. Take necessary approval from Members by passing Special Resolution for alteration of object clause under the Memorandum of Association.
- Intimation and approval of Registrar of Companies: Every company changing its object clause of Memorandum of Association is required to intimate and take approval of Registrar of Companies via filing of MGT-14 within 30 days from the date of passing of special resolution in the General meeting, along with the fee as may be prescribed under the Companies Act, 2013, along with the following below mentioned attachments:
- Certified True Copy of Special Resolution passed at general Meeting;
- Certified True Copy of Notice of General Meeting along with Explanatory statement;
- Certified True copy of revised MOA with altered Object Clause.
- Follow up with ROC: The Company is required to follow up with the Registrar of the Companies from time to time the status of MGT-14, once the Registrar of Companies is satisfied about the compliances of applicable law, it will issue a certificate which will be the conclusive evidence about the compliances of all the laws. Further change of object clause shall only be effective once the same is approved by ROC via issue of Certificate.