Change in company’s objectives
The object clause of a company's Memorandum of Association describes–
- The company's primary line of business (Main Objectives).
- Activities that are required to conduct the primary business activity (Ancillary objects).
There are many reasons for which a company might be willing to change its objectives. For the same, the procedure is as follows.
Step 1: Adopt a board resolution
- In the board meeting, adopt a resolution approving the rectification in the object clause.
- In the meeting, a director or the company's company secretary will be designated to duly sign, verify, and submit the appropriate documents to the RoC.
- Additionally, the Board of Directors will choose the date, time, and location of the members' Extraordinary General Meeting.
Step 2: Adopt a special resolution during the extraordinary general meeting
- Members will adopt a special resolution during the EGM.
- If a company has obtained monetary investment from the public through the sale of prospectuses and has some unspent funds, it is obligatory to make certain disclosures and adopt a special resolution.
- Members will approve a special resolution via postal ballot. A notice will be issued to the members which will contain the details as follows–
- The total amount of money received via issuing prospectus.
- The total amount of money spent on the prospectus's stated objectives.
- Unused funds from the total funds raised through the prospectus issue.
- Details about the intended modification to the objects.
- The explanation for the object modification.
- Amount planned to be used to fund the creation of new items.
- The amount suggested being used to fund the creation of new items.
- The location where an interested party can get a copy of the notice of proposed resolution.
- The special resolution shall be disclosed/ published in two newspapers in the city where the company's registered office is situated (one in English and one in the local language).
- Additionally, SR will be uploaded on the company's website.
- The promoters and other shareholders will provide a chance for disagreeing shareholders (who vote against the decision of the object clause) to depart.
Step 3: MGT-14 is to be registered with the RoC
- Post the EGM passes the special resolution, the designated director or company secretary must file Form MGT-14 to the registrar of the companies.
- Along with form MGT-14, the following documents must be filed.
A Notice of Extra-Ordinary General Meeting (EGM).
B. Certified copy of the special resolution.
C. Altered Memorandum of Association.
D. The explanatory statement to the notice.
Step 4: New certificate of incorporation is issued
The RoC will evaluate MGT-14 upon receipt and, if satisfied, will record the modification in the object clause by announcing a new certificate of incorporation.
Step 5: Incorporating the object clause into the Memorandum of Agreement and the Article of Acquisition
Once the RoC issues the certificate of incorporation, it is obligatory that the object clause must be included in all copies of the MOA.