How to change company’s object clause – Companies act 2013

Object clause is in company’s memorandum of association which is created and filed with ROC at the time of company incorporation. Object clause specifies those objectives for which a company is registered in India. Company can not do any other business which is not specified in the object clause of memorandum of association.

There can be instances where you may require to diversify your business or add a new business line to your main object clause.

In this article we will be looking into different provisions that are related to object clause of a company and how to change company’s object clause legally as per companies act 2013.

As per section 4(6) of companies act 2013, company’s memorandum of association shall be drafted as specified in schedule I based on the type of company that is to be registered with ROC.

Schedule I has tables A, B, C, D and E which is to be used based on the type of company that you are planning to register i.e. private limited or public limited or non profit organization etc.

As per section 4(1) of companies act 2013, a memorandum of association or MOA contains following important clauses;

• Name clause
• Registered office clause
• Object clause
• Liability Clause
• Share capital clause

All these clauses in Memorandum of association can be changed as per the provisions of companies act 2013.

To change company’s main objectives we have to change object clause of the memorandum of association.

Provisions related to change in object clause of memorandum of association is in section 13 of companies act 2013. As per this section, all clauses of memorandum of association except capital clause can be altered by passing special resolution. This means a company is required to pass special resolution for changing its object clause.

For alternation of capital clause, company is required to pass ordinary resolution as specified in section 61 of companies act 2013. Both section 61 and 64 is important to change capital clause of MOA.

Procedure to change company’s object clause in memorandum of association

In the first step, notice has to be issued calling a board meeting in accordance with the provisions of companies act 2013. Board meeting should authorise and/or approve following things;

• authorize director to change company’s object clause in memorandum of association
• to fix date, time and place for conducting extra ordinary general meeting
• Approve notice of EGM that is to be sent to members with the agenda and explanatory statements which is to be annexed with the notice of EGM.
• Authorize director or company secretary to issue notice of the EGM as approved by the board.

Second, notice as approved by board has to be issued on behalf of the company to all members, directors and auditors to call extra-ordinary general meeting.

Third, hold extra ordinary general meeting on the due date as specified in the notice to pass special resolution under section 13(1) of the companies act 2013 to change object clause in memorandum of association.

Fourth, file certified copy of special resolution in company letter head along with following documents for alternation of memorandum of association with register of companies in form MGT14 within 30 days from the date of passing special resolution;

• Notice of calling extra ordinary general meeting
• Altered memorandum of association with the changed object clause

Certified copy of board resolution can be attached as an optional document along with form MGT 14 while filing with ROC.

After filing form MGT14 with ROC, the register shall check the eform and attached documents before giving effect to the alternation of object clause in memorandum of association. If satisfied, the registrar shall register the alternation of object clause in memorandum of association with respect to the objectives of the company and certify the registration within a period of 30 days from the date of filing of the special resolution.