Procedure for Alteration of Object Clause Under Companies Act, 2013

The Section – 13 read with rule 29 of Companies (Incorporation) Rules, 2014 deals with the alteration of object clause of Memorandum of Association of the Company.

This Article contains the procedure for change in Object clause of the Company The Memorandum of association of a Company is the charter document which defines the scope of the activities a Company can perform during its life. It defines the rights of the members of the company’s interest & also establishes the relationship of a Company with its members.

The Memorandum of Association (MOA) of a Company has namely:-

• Name Clause
• Situation Clause
• Object Clause
• Capital Clause
• Nomination Clause

Here we will study the process of for altering the object clause of Memorandum of Association.

Object Clauses is the Clause which determines the purpose and range of activities of a Company which it can undertake during its life time . A Company in order to expand after incorporation of a Company may change the object clause. A Company can alter its object clause either by way of addition, deletion, substitution, modification or in any other way, only if it wants.

Steps for Alteration in object Clause of Memorandum of Association

• • Holding a Board Meeting in accordance with section 173 and Secretarial Standard-1 and passing of necessary Board Resolution for alteration of object clause by proposing the new Objects of the Company subject to approval of Members of the Company;
  • Convening of an Extra Ordinary General Meeting of the Company for according the approval of Members of the Company for altering of object clause by way of an Special Resolution along with the explanatory statement in accordance with the Articles of Association, Section 101 and 102 of the Companies Act, 2013.
  • Alterations to be made in the Memorandum of the Association of the Company.
  • Filing of E-form – MGT-14 as per Section 117 within 30 days from passing the Special Resolution along with the following attachments with the requisite fees:
    • Certified True Copies of the Special Resolutions along with explanatory statement;
    • A printed copy of the altered Memorandum of Association;
    • Shorter Notice Consent if any
  • Once the above process is completed the Registrar shall register the alteration and issue a Certificate serving as a conclusive evidence that all the requirements have been duly complied with by the Company.

Restriction Regarding the Alteration in the Object Clause of the Company

As per Section 13(8) of the Companies Act 2013 read with rule 32 of the Companies (Incorporation) Rules, 2014  a Company which has raised funds through public prospectus shall cannot make any alteration to its Memorandum if it still has any unutilized amount of money so raised unless a Special Resolution has been to that effect by the Company and-

• • Details of such resolution shall also be required to e published in one English newspaper and one in vernacular language where the Registered Office of the Company is situated and shall also be placed at the website of the Company if any indicating the reason of change;
  • if the Company receives any dissent from any of the Members of the Company then they shall be given an opportunity of being heard to exit by the promoters & shareholders having control as per the regulations to be specified by the SEBI.

The Special Resolution if required in the above mentioned case shall be passed through postal ballot in accordance with Rule 32 of the Companies(Incorporation) Rules, 2014.

While drafting the Notice for the Extra Ordinary General Meeting for the above mentioned case for altering the objects of the Company the same shall contain the following particulars:-

• • Money received in total;
  • Money utilized for the objects stated in the prospectus;
  • unutilized amount remaining from the stated prospectus;
  • Alterations made in the object clause;
  • Justification for the alterations so made;
  • Amount to be utilized for the new objects;
  • Estimated impact of the alterations on the Company’s earnings and cash flows;
  • place from where an interested person can obtain the copy of the notice of Special Resolution.
  • any other relevant information;