Change in Object Clause of the Company

A company is a separate legal entity formed by a group of individuals to carry out commercial or industrial activities. It operates within the scope of its stated objectives as outlined in the Memorandum of Association (MoA). These objectives define the scope of activities the company can engage in and guide its operations.

However, as businesses grow and markets evolve, companies may need to change their primary or ancillary objectives to adapt to new business opportunities, expand operations, or enter new industries. Such changes are executed by amending the Object Clause of the Memorandum of Association (MoA).

Why Change Business Objectives?

The company objective stated in the MoA restrict the scope within which a business can act. So, changing objectives is necessary for the following situations:

Undertaking New Ventures: When your company is expanding vertically or horizontally into new areas resulting in new products or services or activities, the objectives of a firm need to be changed to accommodate it.

Company Takeover: When another company takes over a company, major changes take place. The original company’s branding may remain the same, but more often than not, the direction and vision of the company are changed.

Eliminate Abandoned Activities: It might so happen that, over time, some of the company’s activities may prove unnecessary or pointless. In this case, these activities will be slowly abandoned, and the company will have to edit the company objective to reflect the same.

Banned or Prohibited Activities: Government policies keep changing. Sometimes an activity that was legal when the business started may be declared illegal, or the government may restrict permissions. In such cases, your company should avoid that activity and amend the objectives to avoid legal consequences.

For Change or amenfment in objects MOA (Memorandum of Association) is to amended

The MoA explains the two major company objectives:

• Main object: Covers the major business activities of the company
• Ancillary object: Covers the necessary activities for conducting the business plans and needs.

To get these company objectives changed, you will need to follow the five steps:

Step 1: Board Resolution

A meeting of the board should be held, and a resolution has to be passed to make the essential changes in the name and objectives of business. A director/company secretary should be authorised to sign, certify, and file the required forms with the Ministry of Corporate Affairs

Following that, a place and time will be fixed for conducting an extraordinary general meeting (EGM) of members.

Step 2: Special Resolution in EGM

In the EGM, members will pass a special resolution. The reply of the members to the special resolution is obtained. All the members should be given notice with certain mandatory information. Once this notice is circulated, the resolution is passed.

Step 3: File form MGT-14 with Ministry of Corporate Affairs

The form MGT-14 needs to be filed by the company and its director(s) to process further. Some other documents need to be attached with the form for the same (listed below).

Step 4: Issuance of Fresh Certificate of Incorporation

In case the CIN number changes due to a change in the industry code, the MCA will issue a new certificate of incorporation to the company.

Step 5: Incorporation of the MoA Object Clauses

After the RoC issues the incorporation certificate, the company must take steps to incorporate the object clause in all the MoA copies.