Alteration of the Object Clause of Memorandum of Association

The object clause of Memorandum of Association states the purpose of incorporation of the company. This is an important clause since any company performing an act beyond the objects makes it ultra vires. The subscribers of the company decide its objects while incorporating it. However, the Companies Act, 2013, offers provisions to alter the objects of the company at a later date too. You can check the rules for this alteration in Section 13 of the Act. Today, we will share the process of altering the objects clause of Memorandum of Association of a company.

object clause of memorandum of association

We can divide the objects of a company into two parts:

  1. Main Objects: The objects that the company must pursue since its incorporation
  2. Ancillary Objects: The matters that are important for the furtherance of the main objects of the company.

The Process to alter the Object Clause of Memorandum of Association

Here is the detailed process to change the main or ancillary objects of a company:

Approve the alteration of the object clause of Memorandum of Association at the Board Meeting

The first step is to provide notice of at least seven days to convene a board meeting for the following purpose:

  • Deliberate on the alteration
  • Pass a resolution to approve the alteration
  • Authorize a Director or Company Secretary to sign and file the forms with the Registrar of Companies
  • Fix a venue, date, and time for conducting the Extra-Ordinary General Meeting (EGM)
  • Approve the notice and statement for the EGM
  • Authorize the issuance of the said notice

Pass a Special Resolution in the EGM to alter the object clause of Memorandum of Association

At the EGM, pass a Special Resolution required for the alteration of the object clause of Memorandum of Association.

Disclosure requirement in specific cases:

There will be some companies that have issued a prospectus and raised funds. Also, they might have some unutilized funds lying with them. Such companies need to make the following disclosures along with the special resolution:

  1. The company will obtain a special resolution of the members. It must issue a notice to all members with the following details:
      • The total amount of money received from the public (through the issuance of the prospectus).
      • The amount of money utilized for objects (from the prospectus).
      • Unutilized money (Money received – Money utilized)
      • A list of the proposed changes in the object clause of Memorandum of Association
      • Reasons behind the proposal
      • The amount that the company intends to use for the new objects.
      • The expected financial impact of the alteration on the cash flow & earnings of the company.
      • Any other relevant information
      • Details of the place where any interested person can get a copy of the notice of resolution.
  2. The company must also publish the Special Resolution in newspapers. Further, it must ensure that it publishes it in one English newspaper and one in the local vernacular language where the company has its registered office.
  3. Also, place a copy of the Special resolution on the company’s website.
  4. If any shareholders disagree with the alteration, then the company must give them enough time to exit.

If the company has not received any funds from the public or has utilized all the received funds, then this notice is not required.

Filing Form MGT-14

The authorized director or company secretary must also ensure that it files Form MGT-14 within 30 days of passing the special resolution. They need to file this form with the Registrar of Companies. Further, they must attach the following documents with the form:

  • A certified copy of the Special Resolution along with the explanatory statement to the notice.
  • Notice of the EGM
  • The final version of the altered and signed Memorandum of Association

Sometimes, the company might hold the EGM at a shorter notice. In such cases, the company must also attach a copy of the consent received from all shareholders approving the same.

Receive the new Certificate of Incorporation

Once the Registrar of Companies receives form MGT-14, it conducts a compliance check. If the Registrar is satisfied, it registers the change and issues a fresh certificate of incorporation. Further, the alteration of the Object Clause of Memorandum of Association is not complete unless you receive a fresh incorporation certificate.

Incorporate the changeĀ 

On receiving the new certificate of incorporation, the company must incorporate the changes in all copies of the Memorandum of Association.

Summing Up

Remember, the Articles and Memorandum of Association are the backbones of a company. Making any changes requires compliance with certain rules. We hope that this article offered insight into the process of altering the Object Clause of Memorandum of Association. Please drop us a line for any further clarification and our team will gladly assist you.


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