Change Of Objective Of Company

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    Alterations Made To The Objectives Of A Company

    The aim clause of the Memorandum of Association of Company (MOA) states that the Company will change:

    • The primary purpose of the company.
    • Activities that are necessary to carry out the primary business activity.

    If you want to modify the primary purpose of the firm or an auxiliary objective, you need complete these procedures accordingly:

    1. Approval of the resolution by the board
    A firm director will preside over a meeting that will be held to vote on a motion to alter the object clause. The paperwork that needs to be signed, certified, and filed with the RoC might be approved to be done so by the director or the Company Secretary. In addition, the board of directors will convene an extraordinary meeting of the organization's members.

    2. Resolution of particular importance adopted at the Extraordinary General Meeting (EGM)
    An EGM will be held to vote on and approve a special resolution. Along with approving the special resolution at the meeting, the corporation must make an additional disclosure if it has previously solicited financial support from the general public and then decides to spend money from this source. The special resolution will be selected to employ a postal ballot. A note containing the following information will be sent to every member:
    – The sum of money collected from members of the public.
    – The whole amount of money spent, as detailed in the prospectus.
    – The portion of the total amount received that was not put to use.
    – Specifics on the adjustment that is being suggested.
    – The rationale for the morphological changes in the items.
    – Amount indicated for purchase of the new items in question.
    – The anticipated negative impact on the bottom line is caused by implementing the change the organization considers.
    – Various other information.
    – A location where information on the resolution may be obtained by anybody interested.

    Additionally, the special resolution (SR) will be published in the local newspaper, both in English and in the language spoken there, in the same city as the registered office. In addition, SR will be uploaded to the corporate website. All shareholders who voted against the decision will be given a chance to have their voices heard.
    The declaration does not have to be made if the firm has not received any money from the general public or if all of the funds that it has received have been used up entirely. It is sufficient to make a particular resolution.

    3. Submission of form MGT-14 to the ROC
    When the directors are satisfied that the special resolution has been effectively passed, they will submit Form MGT-14 to the RoC. Documents required:
    A copy of the particular solution that has been certified.
    Public Notification of an Unscheduled General Meeting.
    – Explanatory statement Concerning the Alternate or New Memorandum of Association.

    4. A certificate under the new object clause
    Following receipt of the MGT-14, the RoC will review the form, and then they will register the new object clause by providing a certificate for the Object Clause.

    5.  Once an object clause certificate has been obtained from the ROC, the new object clause has to be updated in every copy of the Memorandum of Association.

    change of objective of company

    Justification For Changing The Object Clause

    The following list contains a few of the possible explanations for why the company is making this change to the object clause:

    • The corporation may have in mind to grow its customer base by adding additional services.
    • To accomplish the objectives, the company has established via continued systematic development and the exploration of novel approaches.
    • To handle new business in addition to the services already offered by the firm.
    • Selling or getting rid of the business element might change the firm's structure.
    • Changing the firm's goal is necessary if it is going to be merged or consolidated with another business.

    FAQs(Frequently Asked Questions)

    What are the factors to be considered in determining the object clause of the Memorandum of Association?

    It should define the scope of the company’s operations. Also, the details of the scope of the company’s activity for the members and explains how the member’s capital will be utilized.

    How can a company change its name and object clause?

    Under Section 13(2) of the Companies Act, 2013, the company name and object clause can be changed by passing the special resolution after receiving the approval of the Central Government.

    How do I change a company's MOA?

    Conduct an Extraordinary General Meeting. Get the mutual consent of all the directors for the special resolution. Make changes in MOA, after receiving the approval from RoC for the company’s object clause change.

    Can a company have 2 main objects?

    Yes, a company can have multiple businesses, but it depends on whether the activities are related. The company can carry multiple activities with the consent of members.