Change in the Object Clause

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Table Of Content

  1. Change in the Object Clause
  2. Why Change the Object Clause?
  3. Eligibility for Object Clause Amendment
  4. Process of Changing the Object Clause
  5. Documents Required for Object Clause Amendment
  6. FAQs
  7. Get in Touch with us

Change in the Object Clause

The Object Clause in a company’s Memorandum of Association (MoA) plays a vital role in defining the scope of activities the business can legally engage in. Essentially, it outlines the company’s primary objectives and the nature of its operations. Over time, as market conditions evolve and business strategies shift, companies may need to modify their Object Clause to stay relevant, competitive, or compliant with new regulations. Whether a business is expanding into new industries, merging with another entity, or responding to regulatory changes, amending the Object Clause ensures that the company’s operations remain lawful and strategically aligned. In India, any changes to the Object Clause must strictly follow the provisions of the Companies Act, 2013, ensuring full compliance with corporate governance standards.

Why Change the Object Clause?

It allows companies to venture into new industries or engage in activities not initially covered in the MoA.
Ensures that the company remains compliant with industry-specific laws and regulations that evolve over time.
Updating the Object Clause to include diversified objectives can attract investors who see growth potential.
Companies can realign their objectives with current market demands and strategic goals, demonstrating adaptability.
Aligns company objectives with those of newly acquired entities or businesses in mergers, ensuring legal clarity and operational cohesion.

Eligibility for Object Clause Amendment

  • Business diversification
  • Discontinuation of certain operations
  • Strategic reorientation
  • Mergers and acquisitions
  • Compliance with legal and regulatory changes

    • Process of Changing the Object Clause

    Step 1

    The process starts with a board meeting where the directors discuss and approve the need to change the Object Clause. A resolution must be passed to call for an Extraordinary General Meeting (EGM) to obtain shareholder approval for the proposed changes.

    Step 2

    During the EGM, shareholders vote on the proposed changes to the Object Clause. A special resolution is required, meaning at least 75% of shareholders must approve the amendment.

    Step 3

    Once approved by the shareholders, the company must file a special resolution with the Registrar of Companies (RoC) within 30 days of the EGM. Form MGT-14, along with the revised Memorandum of Association (MoA), must be submitted to officially register the change.

    Step 4

    The RoC reviews the submitted documents. Once the RoC approves the changes, the new objectives come into effect, and the company is legally allowed to undertake the revised business activities.

    Step 5

    After receiving approval from the RoC, the company should update its corporate records, including business documents and website, to reflect the revised Object Clause.

    Documents Required for Object Clause Amendment

    Board Resolution
    Notice of EGM
    Copy of the Special Resolution
    Amended Memorandum of Association (MoA)
    Form MGT-14
    Acknowledgment of RoC approval
    Payment receipts (stamp duty, fees, etc.)

    FAQs

    What is the Object Clause in the MoA?

    The Object Clause defines the scope of activities a company can legally undertake. It outlines the primary purpose and operations of the business.

    Why do companies change the Object Clause?

    Companies amend the Object Clause to diversify their business activities, comply with new regulations, or realign their strategic objectives.

    What is the process for changing the Object Clause?

    The process involves approval from the board of directors, a special resolution passed by shareholders, and filing the necessary forms with the Registrar of Companies (RoC).

    What is a Special Resolution in the context of Object Clause changes?

    A Special Resolution requires at least 75% approval from the company’s shareholders to make amendments to the Object Clause.

    What forms need to be filed for changing the Object Clause?

    Companies must file Form MGT-14 with the RoC, along with a copy of the Special Resolution and amended Memorandum of Association (MoA).

    Is shareholder approval necessary for changing the Object Clause?

    Yes, shareholder approval is mandatory. The amendment cannot be processed without the consent of at least 75% of the shareholders.

    Can companies remove objectives from the Object Clause?

    Yes, companies can remove or modify objectives through the same process used for adding new objectives to the Object Clause.

    Can the Object Clause be changed multiple times?

    Yes, companies can amend the Object Clause as many times as needed, following the proper procedure each time.

    What happens if a company does not update its Object Clause?

    If a company operates outside its stated objectives without updating the Object Clause, it may face legal penalties and other consequences.

    What is Form MGT-14?

    Form MGT-14 is used to file resolutions with the RoC, including changes to the Object Clause. This form is essential for legally documenting any amendments made to the MoA.

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