Procedure for Change in Objects of the Company

A company may decide to change its objects clause for various reasons, such as expanding into new markets, changing business strategy, regulatory requirements, or diversifying into new activities. Whatever the reason, the company must follow a set procedure to alter its Memorandum of Association (MoA).

Reasons for Changing the Objects Clause

Companies often change their objects clause when expanding into new markets or diversifying into activities beyond their original business scope. A shift in business strategy or regulatory changes can also require an update. In all cases, the company needs to ensure the change aligns with its long-term goals and complies with legal requirements.

Steps for Changing the Objects Clause

1. Board Meeting for Approval
   The process starts with a board meeting to approve the proposal to alter the objects clause. This includes drafting the resolution, setting a date for an Extraordinary General Meeting (EGM), and authorizing a director to send out the notice for the EGM.
2. Issuing the EGM Notice
   Once approved by the board, a notice for the EGM must be sent to shareholders, directors, and auditors at least 21 days before the meeting, as per Section 101 of the Companies Act. The notice should include the agenda, the draft resolution, and a clear explanation of the change.
3. Holding the EGM
   At the EGM, shareholders vote on the proposed change. A special resolution requires at least 75% of votes in favor. The company must provide sufficient information to ensure shareholders understand the implications of the proposed amendments.
4. Filing with the Registrar of Companies (ROC)
   Once the resolution is passed, the company must file it with the ROC within 30 days using Form MGT-14. This filing includes the special resolution, notice of the EGM, and an updated MoA.
5. Approval from the ROC
   The ROC reviews the submission, and if everything is in order, it approves the changes. The updated MoA is then reflected in the company’s records.
6. Alteration of Certificate of Incorporation
   In some cases, the company’s Certificate of Incorporation may need updating, particularly if the change significantly affects the company’s identity or name.

Post-Approval Steps

After the ROC’s approval, the company must update its corporate records, notify stakeholders, and revise public documents such as the website and letterheads.

Legal Compliance

Companies must also consider the impact on existing contracts, licenses, and permits. Additionally, minority shareholders’ rights should be respected, ensuring transparency throughout the process.

Changing a company’s objects clause is an important step that requires careful planning, legal compliance, and thorough documentation. By following the proper procedure, companies can effectively adapt to new opportunities.