The term “Object Clause” of the company refers to the memorandum of Association (MoA) and Article of Association (AoA). These are legal documents that figure out the company’s constitution and governance structure. The Object clause of the company specifies the main and ancillary objectives of the company.
Alterations in the object clause of the company, why?
- If the company wishes to enhance the scope of its operations and carry it on a larger scale.
- To acquire the company’s goals through the latest and improved techniques.
- To start an additional business with the existing company.
- To dispose of the part of the company, which affects the company’s structure.
- To expand its existing objective by getting combined with other companies.
Change in the Object Clause is a legal process that involves several steps and compliances with some formal requirements. Amendments in the MoA affect the company’s structure, objectives, and operations.
Memorandum of Association-
The Memorandum of Association of the company has object clauses that regulate a range of activities of the company and determine their purpose. The alternations can be made in the MoA of the company through special resolution as prescribed in the Companies Act, 2013.
What is the procedure for amending the object clause of the company’s MoA?
Call & hold the Board meeting: Send a notice of the board meeting to all of the company's directors seven days before the meeting's date, together with the agenda, notes on the agenda, and a draft resolution.
- Organize a board meeting for the company's directors.
- Present new ideas to the company's directors during the meeting.
- Pass a board resolution after choosing the right object.
- To amend the object, get the directors' agreement before putting the suggestion before the membership.
- Fixing the date, time, and location of the extraordinary general meeting and designating a director to notify other members of it.
Notice for extraordinary general meeting: Notice for the EGM should be given 21 days before the date of the fixed general meeting. The notice must include the objective statement of business to be discussed in EGM.
Hold Extraordinary general meeting: Shareholders and members will vote in favor of a special resolution to amend the MOA's object provision at the EGM. A three-fourths majority is required to approve the resolution. When a resolution is passed by a listed company, the company must provide a copy of the resolution and the information that came before it to the stock exchange where its shares are listed.
In the following situations involving firms, Special Resolutions must be approved by postal election:
- A group with almost 200 members.
- A company possesses funds that were raised through the issuance of a prospectus but have not yet been used.
Filing and charges: The company must fill out the form MGT-14 with the registrar along with necessary filings within 1 month of passing the special resolution in EGM.
Certificate issuance: The registrar will issue the registration certificate after scrutinizing and validating the form. This certificate is considered as evidence that the alterations have been made to the object clause of the company.
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