Change in objectives of a Company

According to the object clause mentioned in the Memorandum of Association of Company (MOA):

  • Primary business objective
  • Activities required to conduct main business activity is ancillary objective

To change the company objective or ancillary objective, the following steps should be followed:

1. Passing of board resolution

A director of the company will be conducting a meeting to pass a resolution to change the object clause. The director or Company secretary will be authorized to sign, certify and file the required forms with the RoC. Also, the board of directors will conduct an extraordinary general meeting of members.

2. Special Resolution in Extraordinary General Meeting (EGM)

EGM will be conducted to pass a special resolution. If the company has raised funds from the public and decides to use funds out of these, it has to make a is disclosure along with passing the special resolution in the meeting. A postal ballot will obtain the special resolution. A notice will be issued to all the members with the following details:

  • Total money received from the public
  • Total money utilized as mentioned in the prospectus
  • Unutilized money from the total money received
  • Details related to the proposed change
  • The explanation for the change in the objects
  • Proposed amount to be used for the new objects
  • The estimated financial effect of the change proposed on the earnings of the company
  • Other information
  • Place where an interested person can obtain information about the passed resolution.

The special resolution (SR) will also be published in the newspaper (in English and local language) where the registered office is located. Additionally, SR will be placed on the website company. An opportunity will be given to all the shareholders who voted against the decision.

If the company hasn’t received funds from the public, or all the received funds are utilized completely, making the disclosure is not required. A special resolution is enough.

3. Filing of MGT-14 with RoC

After passing the special resolution successfully, the directors will file Form MGT-14 with the RoC. Documents required:

  • Copy of certified special resolution
  • Notice of Extraordinary General Meeting
  • Explanatory statement
  • Changed (New) Memorandum of Association

4. New Object Clause certificate

After receiving the MGT-14, RoC will examine the form and will register the new object clause by issuing an Object Clause certificate.

5. After receiving a Object Clause certificate from the RoC, the new object clause must be changed in all the copies of the Memorandum of Association.

Reason to Change Object Clause

The following might be the several reasons for which the Company is changing the object clause:

  • The company might plan to expand its business by including new services.
  • To achieve the goals that are set by the Company by improving and trying new methods.
  • To carry additional business, along with the existing services of the company
  • To sell or eliminate the business part which can alter the business structure
  • If the company is getting amalgamated or merged with another company, a change in the objective is required

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.