Can a company carry multiple businesses under one roof?

A company is incorporated with the mandated and most important document called the MoA i.e. Memorandum of Association which describes the purpose for which the company is formed.  The scope of activities of the company is defined by the charter documents of the company, i.e.-MoA and AoA. Every company formed in India under the Companies Act,2013 is required to have MoA without which a company cannot be formed.

According to section 4(1)(c) of the Companies Act, 2013, every MoA must contain the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof. In other words, the “object clause” of the company is mentioned in the MoA of the Company, which should be furnished to the Ministry of Corporate Affairs at the time of incorporation of the company.  The object clause of the company defines the activities which will be carried on by the company and that outlines the scope of business.

The MOA should be stated in the following manner: –

• The main objects of the Company;
• Objects/activities which are incidental or ancillary to the main objects of the company.

 A company cannot go beyond the object clause of the Company which would lead to ultra-virus activities and hence will be null and void.

Now comes the question whether a company can register for multiple business at the time of registration?

Yes, a company can register for multiple businesses, but it depends on whether the activities are related or not. The company can carry more than one activity with the consent of the members.

However, all the activities which are listed should pertain to the main business of the company. Activities which are related to the main business or ancillary to the main business can be carried under one roof.

Let us understand with the help of an example: A software development company whose main objective is to develop software for clients. This company if wants to deploy manpower to train them about the processing and developments in software can do so if it is for the benefit of the company or to achieve the business goal. However, it should not make the manpower service as its lead objective or main objective of the company.

If the company starts to impart training to students or outsiders which is not related to the actual production/ development of the company then it will be considered as unrelated activity. The training falls under the category of education whereas the software development falls under another category.

Taking the cue of above points, the different activities should be provided in such a manner that they can be interlinked.  If the company wants to enter in another field, then the option is to create a private limited company or subsidiary or associate company. If a specified activity is ancillary to another it shall be categorised in the same manner.