Object Change

Understanding Object Change: Amending the Object Clause in a Company’s MOA

In the realm of business operations, a company’s trajectory is guided by its Memorandum of Association (MOA), with a pivotal element known as the Object Clause. The Object Clause meticulously outlines the activities a company is authorized to undertake post-incorporation, comprising two crucial components:

1. Main Activity: The primary business pursuit of the company.
2. Activities Ancillary to the Main Business: Complementary activities associated with the primary business.

It’s imperative to grasp that a company is legally restricted from engaging in activities beyond the scope delineated in its Object Clause. In this comprehensive guide, we delve into the Object Clause amendment process, the reasons driving this change, and the procedural steps involved in ensuring seamless business expansion through Object Change.

Exploring Object Change: Reasons and Rationale

Companies may embark on the journey of amending their Object Clause for an array of reasons, including but not limited to:

1. Strategic Expansion: The desire to scale up operations and broaden the scope of activities.
2. Innovation Drive: Embracing new or enhanced methods to achieve pre-defined business objectives.
3. Diversification Goals: Venturing into additional businesses that align with existing company operations.
4. Structural Reconfiguration: Selling or divesting specific business segments that may impact the overall business structure.
5. Mergers and Amalgamations: In cases of mergers or amalgamations with other entities, expanding the existing objectives may be a necessity.

The Path to Object Change: Step by Step

When a company envisions engaging in activities that fall beyond the purview of its current Object Clause, it must navigate a structured secretarial procedure. Here’s a concise roadmap:

1. Convene a Board Meeting: The process commences with a Board Meeting. During this pivotal gathering, directors deliberate and secure approval for amending the Object Clause in the Memorandum.
2. Notice for Extra-Ordinary General Meeting (EGM): Subsequently, issue a notice with a minimum 7-day notice period to convene an Extra-Ordinary General Meeting (EGM). The EGM serves as the platform to seek approval from shareholders for the proposed Object Change. Draft an agenda and an explanatory statement in line with Section 102 of the Companies Act 2013.
3. EGM Execution: Host the EGM and secure the shareholders’ approval through the passage of a special resolution. Typically, a special resolution necessitates a three-fourths majority. For listed companies, ensure prompt submission of the resolution and related details to the stock exchange where the company’s shares are listed. In cases meeting specific criteria, such as having more than 200 members or unutilized funds raised via prospectus issuance, special resolution passage may occur via postal ballot.
4. ROC Filing: Post the successful adoption of the Special Resolution, the company must file the resolution, highlighting the Object Clause amendment in the MOA, with the relevant Registrar of Companies (ROC). This filing is executed using Form MGT-14 and must be accompanied by the prescribed fee. The following documents should be attached to the form:

• • Notice of the EGM
  • Copy of the Special Resolution
  • Amended MOA
  • Copy of the Board resolution passed

1. Approval by ROC: On receipt of the application, the ROC meticulously scrutinizes the submission. In instances of a compliant application, the ROC proceeds to approve the alteration and furnishes the requisite certification. This approval process typically concludes within 30 days of submitting the Special Resolution.

In summation, comprehending Object Change and the associated process of amending the Object Clause within a company’s MOA is paramount for businesses seeking to adapt, expand, or reshape their operational landscape. Adhering to the prescribed legal procedures ensures a seamless transition, maintaining transparency and conformity with regulatory mandates.

Are you contemplating Object Change for your company’s strategic growth? Contact Ruchita Dang & Associates for expert guidance, facilitating a smooth Object Clause amendment process. Expand your horizons with us!