Memorandum of Association of the Company is the foundation of any company which is being incorporated.
Memorandum defines the scope and power and rights within which a company operates. Detailed lists of activities to be performed by the Company after it is incorporated are mentioned in Object Clause of Memorandum of Association.
Activities to be performed by the Company included in the object clause consist of two parts:
- Main Activity, and
- Activities ancillary to main business
The Company is prohibited from carrying on the business outside the scope of its objects. In this article, we are going to discuss the object clause and the procedure for its amendment to conduct the business other than the mentioned objects in its MOA.
Why Amend Object Clause (Various Reasons):
There can be many reasons for which Company alter its objects clause like:
- To attain the goals set by the Company by new or improved methods.
- Where a want to carry on its business on a larger scale by enhancing the scope of its activities.
- To sell or dispose of the part of the business which can alter the structure of the business.
- Where Company is getting amalgamated or combined with other companies, it needs to expand its existing objective.
- To carry such additional business that can easily be combined with the existing business of the company.
- And Others.
Procedure to change Object Clause of Memorandum of Company:
Hold Board Meeting :
Send the notice of 7 days to hold the Board Meeting to discuss the following agenda:
- To obtain in-principal sanction of directors for the alteration in object clause related to the MOA.
- Select date, time and place for conducting Extra-ordinary General Meeting (EGM) to obtain consent of shareholders, by means of special resolution, for alteration in object clause of Memorandum.
- To render support to make notice of EGM all together with Agenda in addition to Explanatory Statement to be suitable as per the notice of General Meeting according to section 102(1) related to the Companies Act, 2013.
- Present Notice of the Extra-ordinary General Meeting (EGM) to all Members, Directors as well as the Auditors of the company in agreement with the provisions as per Section 101 of the Companies Act, 2013.
- Present Notice of the Extra-ordinary General Meeting (EGM) to all Members, Directors as well as the Auditors of the company in agreement with the provisions as per Section 101 of the Companies Act, 2013.
Conduct EGM:
- Take approval of shareholders by special resolution approving changes the MOA object clause of the company by means of ballot.
E-Form Filling:
Form MGT-14 should be filled within 30 days from the passing of the Special Resolution along with the approved fees and following attachments:
- Sanctioned True copy related to special resolution.
- Altered/Changed Memorandum of Association.
- Notice of EGM
- Sanctioned true copy of Special Resolution along with explanatory statement.
In Case of Public Limited Company:
The following procedures must also be observed in case of change in Memorandum of a Public Limited Company.
- Details of special resolution must be published in the newspapers (one in English in addition to one in vernacular language). The newspaper should be in circulation at the location where the registered office of the company is located. In addition the newspaper will be placed on the website of the company, if some, mentioning the rationalization and reason for such alteration.
- The dissenting shareholders must be provided an opportunity to exit via the promoters and shareholders.
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