Change in Object Clause

"The MOA, foundational to entities under Companies Act, 2013, outlines object clause. To alter it, adhere to secretarial process. Add new objects while ensuring legality for the company."

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What is Memorandum of Association or MOA

Memorandum of Association (MOA) of a company, its importance, and the various clauses it includes. The MOA is indeed a crucial document when it comes to the registration and functioning of a company, as it outlines the company's foundational structure, objectives, and limitations. The Object Clause, in particular, is a vital component of the MOA.

The Object Clause defines the specific business activities that the company is authorized to engage in after its registration. It essentially outlines the main business activities that the company will undertake and any related activities that support the main objectives. The Object Clause can be divided into two parts:

Main Activities: This part includes the primary business activities that the company intends to carry out. These activities are the core operations for which the company is established.
Activities Ancillary to the Main Business: These are secondary activities that are related to and support the main business activities of the company. These activities are necessary for the successful execution of the main business objectives.

It's important to note that a company is legally bound to operate within the scope of its Object Clause. If a company engages in activities that go beyond what is specified in its Object Clause, those activities are considered ultra vires (beyond the powers) of the company and are therefore void and not legally enforceable. This provision prevents companies from venturing into unrelated or unauthorized activities that were not part of their original intent.

If a company wishes to change or expand its business activities beyond what is stated in its Object Clause, it must go through a process of altering its MOA. This typically involves obtaining approval from the shareholders through a special resolution and then filing the necessary documents with the relevant government authorities, as per the legal requirements.

Overall, the Object Clause serves as a crucial safeguard to ensure that a company operates within its intended purpose and does not engage in activities that are not in line with its initial objectives as outlined in its MOA. This helps maintain transparency, accountability, and legal compliance in the business operations of the company.

The Procedure to Amend Object Clause of the MOA of the Company

Steps and procedures involved in amending the Object Clause of a company's Memorandum of Association (MOA) to include additional business activities. This process is indeed crucial for companies that want to expand their scope of operations beyond what was originally stated in their MOA. The process you've described follows the legal requirements set forth by the Companies Act of 2013 in India.

To reiterate the process you've mentioned:

Board Meeting: The company initiates the process by convening a Board Meeting where the directors discuss and approve the amendment to the Object Clause.
Notice of EGM: After Board approval, the company sends a notice at least 7 days in advance to hold an Extraordinary General Meeting (EGM). The notice includes the agenda for amending the Object Clause.
Conduct EGM: At the EGM, shareholders' approval is sought through a special resolution, which generally requires a 3/4 majority. For specific types of companies (those with more than 200 members or those holding unused money raised through prospectus), this special resolution might need to be passed through postal ballot.
ROC Filing: Once the special resolution is passed, the company files Form MGT-14 with the Registrar of Companies (ROC) within 30 days. This form includes attachments such as the special resolution, notice of EGM, board resolution, and the altered MOA.
Approval by ROC: The ROC reviews the application and, upon satisfaction with the correctness of the application, approves the alteration. The ROC issues a registration certificate within 30 days of filing the special resolution.

FAQ

Frequently Asked Questions

Memorandum of Association is an abbreviation of MOA. MOA of Company is the base of any company which is being registered. It is believed that MOA is the constitution of the Company and also it defines the scope of rights and responsibilities within which the business operates.

A Company that holds such money which remains unused which was raised by the issue of prospectus. Before altering the object clause, such Companies shall pass a resolution, and such resolution shall be displayed or published in both English newspaper and vernacular newspaper.

New E-form 33 is an online SPICe form for MOA of the company which is filed while integrating the Company with SPICe 32 and SPICe 34. Therefore the Company needs not to submit this online form again with form MGT-14 for certification of alteration. Having a physical copy of MOA along with MGT-14 will be enough.

Earlier object clause comprised of 5 clauses which are now deleted under Companies Act 2013, now it has only two object clause remain in new online form SPICe 33 for MOA, such as