PRACTICE DETAILS
- Lawyer Mr. Shaman Jain
- Skills Change In Business
- CATEGORY Change In Business, Compliances
ABOUT THIS PRACTICE
The business objectives are defined in the main object clause of MoA, when we discuss about the company specifically. These objectives define the scope of the company’s principal business activities within which it may exercise. A company cannot perform any of the activities, which are not mentioned in its object clause.
Due to expansion or strategic changes, a company may need to undertake new activities or update business activities in MoA. This change in object clause of MoA is only possible after consent of shareholders and the approval from Ministry.
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Why change the business objective?
- New Activities to be undertaken: Any addition in the activities paves the way for changing business objective. During incorporation of the company some activities may not be mentioned ,however,with the expansion in vertical or horizontal activities there arises a deviation from the already mentioned activities.Therefore, before undertaking such activities, the company must undertake the change of business activity.
- Takeover of the company: Many times a company is acquired by another company for the sake of its market value built. The objects of the company acquired must be updated as per the requirement of leading the business further. The object can be altered either before or after the acquisition depending on the requirement.
- Remove abandoned activities: The company’s memorandum is easily accessible to any person, who may refer it before binding into contractual relation. Hence, one must ensure that the objects are updated with the Ministry even by deleting the activities that the company has deserted to handle.
- Current activities are banned or prohibited: The Government policies may change anytime, which majorly affects the company and its operations. If the activities undertaken by a company is prohibited , such an object must be detached from MoA or completely altered , as per the requirement .
Procedure for change in Object Clause of Private limited company?
- Hold board meeting so as to pass required board resolution for approval of the proposed amendment of object clause in Memorandum of Association of the company subject to approval of Shareholders' in Extra-Ordinary General Meeting.
- Conduct Extra-Ordinary General Meeting and pass Special Resolution for alteration of Memorandum of Association to change object clause of business.
- File form MGT-14, within 30 days of passing the resolution enclosing a printed copy of altered Memorandum of Association.
Documents Required
- MoA & AoA: A copy of latest amended MoA and AoA of the company
- Digital Signature Certificate: DSC of one of the authorized director to be provided
- Detail of change: Details of the proposed change in activities
Process Of Change In Object Clause
- Consultancy and assistance for a change of the object
- Collection of basic Information & documents
- Application for DSC (for partners to be appointed)
- Drafting of necessary resolutions and documents
- Drafting of new object clause of MoA
- Provide documents required drafted after signature
- Preparation of application for change of business activity
- Application filing for approval of MCA
- Government processing time
