The object clause of the Company is the third clause of memorandum of association of any Company stating the objects i.e. the business/purpose for which the Company is incorporated and any other matter considered necessary in furtherance thereof. Any act done by the Company that is beyond the objects and powers as mentioned in the Companies Act, 2013 shall be considered as ultra virus making object clause one of the most importance clause. On registration of a Company, the subscribers decide upon the objects they want to pursue on incorporation but in case after incorporation they want to change the objects of the Company, they can do so by following the requisite legal procedure as prescribed under Section 13 of the Companies Act, 2013 read with Companies (Incorporation) Rules, 2014 that shall be discussed further in this article:
To discuss, primarily it is important to note that the object clause of the Company can be divided into following:
- The objects to be pursued by the Company on its incorporation (i.e. main objects); and
- Matters which are necessary for furtherance of the objects (i.e. ancillary objects).
PROCEDURE FOR ALTERATION OF OBJECT CLAUSE OF MOA UNDER COMPANIES ACT, 2013
| S. No. | Particulars |
| 1. | Call and convene the Board Meeting by giving notice of not less than seven days for the following purposes:
• Consider the agenda for alteration of object clause • Fixation of day, date, time and place of Extra Ordinary General Meeting (EOGM). • To approve the notice of EOGM and explanatory statement to be annexed to the notice. • Authorisation for issuance of notice. |
| 2. | Issuance of notice of EOGM to all the members, Directors and the Auditors of the Company at least 21 clear days before the actual date of the EOGM in accordance with the Secretarial Standards-II. |
| 3. | Holding of EOGM on due date and pass the requisite resolution for alteration of object clause of memorandum of association of the Company. |
| 4. | Filing of Form MGT-14 within 30 days of passing the special resolution along with the following attachments:
• Certified True Copy of special resolution passed along with the explanatory statement • Copy of notice of EOGM • Final altered signed memorandum of association • In case the EOGM is held at a shorter notice, then the consent as received from the shareholders shall also be attached as an optional attachment. |
DUTY OF REGISTRAR
The Registrar will issue such certificate which shall be the conclusive evidence that all the requirements with respect to the alteration have been duly complied with by the company. Further, no alteration made under this section shall have any effect until it has been registered in accordance with the provisions of this section.
The alteration shall be complete and effective only on the issue of certificate by the Registrar.
FAQs on Alteration of Objects Clause of MOA under Companies Act, 2013
1. A company dealing in trading of garments, if wishes to start dealing in paper product can do so i.e. whether a Company can altogether change or add business activity?
If a Company having the main object as trading of garments wants to start altogether a new business activity (i.e. suppose trading of paper product) can start it as well. The only compliance required on part of the Company would be to make proper reporting in Form MGT-9, AOC-4 and MGT-7.
2. Whether Form MGT-14 is on approval mode?
Yes, MGT-14 is on approval mode i.e. it has to be approved by the officials of the Registrar of Companies.
3. In the Form MGT-14, there is a tab “in case of alteration in object clause, whether there is any change in the industrial activity of the Company”; how the same is to be dealt with?
With respect to the said tab, we need to check whether the main object clause of the Company is being altered. If “yes” is selected, the form asks for the changed NIC code. We have to fill in the changed national industrial classification (NIC) code as per NIC Code, 2004.
4. What are the implications of object change under the provisions of Income Tax Act, 1961?
There is no implication as such under the provisions of the Income Tax Act, 1961. However, we must draft/alter the object clause very meticulously as only the expenses incurred for the main business or profession are allowed as deduction from the income.
{The author is a Company Secretary in Practice and can be reached at (M) 9999952595 and (E) cskajalgoyal@gmail.com}
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