A company cannot undertake an activity its object clause does not cover. Change the clause first, get the Ministry’s approval, and then start trading in the new line.
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What the object clause does, why it has to be changed before the activity starts, and why companies choose LegalWiz.in.
A company’s business objectives are defined in the main object clause of its Memorandum of Association. Those objectives define the scope of its principal business activities: the limits within which it may operate. A company cannot undertake an activity that is not prescribed in its object clause.
So when a company expands or changes direction, and needs to take on new activities, the object clause has to be updated. That change requires the consent of the shareholders and the approval of the Ministry.
The order matters. The application to update the business activity is filed within 30 days of obtaining the shareholders’ consent in general meeting, and the change takes effect only when the Registrar has approved it. Only after that approval may the company carry on the updated activities.
Your relationship manager and the drafting team handle everything below. You supply the documents once and approve the drafts.
Government fees are charged at actuals. The application has to be filed within 30 days of the shareholders’ consent, and the company may not begin the new activities until the Registrar has approved the change.
Make sure the new object also covers everything ancillary to the main object, or the same problem recurs the first time an adjacent activity comes up.
The name should represent the object correctly after the change. Where it does not, the Registrar may direct that the name be changed.
The memorandum is a public document that anybody may read before contracting with you, so abandoned activities should be deleted rather than left in.
Where the Registrar thinks it appropriate, they may direct the adoption of a fresh Memorandum and Articles in line with the Companies Act, 2013.
Adding new activities is the main reason to change the objective. The change is usually backed by a vertical or horizontal expansion into activities that were not mentioned at incorporation, and the company must make the change before it undertakes them.
A company is often taken over for the market value it has built. The objects of the acquired company then have to be updated to carry the business forward, and the object can be changed either before or after the takeover as the requirement demands.
The memorandum is accessible to anybody, who may consult it before entering into a contractual relationship. So the objects should be kept current with the Ministry, including by deleting activities the company has abandoned.
Government policy can change at any time, and that affects the company and its operations directly. Where an activity is declared prohibited or banned, that object has to be removed from the MoA or changed completely.
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A short checklist. Everything else is drafted for you.
A copy of the latest amended Memorandum and Articles of Association of the company.
The DSC of one of the authorised directors of the company.
Details of the proposed change in activities: what the company wants to start doing, and what it wants to stop.
Step 01
Step 02
Step 03
Subject to government processing time.
Up to ten working days. The drafting and the filing take five; the rest is the Registrar’s approval.
1 of 10 working days
2 of 10 working days
2 of 10 working days
5 of 10 working days
Subject to government processing time.
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Make sure the new object also covers every activity ancillary to the main object.
The name should also represent the object correctly after the change. Where it does not, the Registrar may direct that the company change its name.
Within 30 days of obtaining the consent of the shareholders in general meeting.
It should be noted that the approval must be obtained before the company involves itself in the new activities.
Only on receipt of the Registrar’s approval for the application made.
The company may carry on the updated activities only after that approval.
Yes. The object clause is part of the Memorandum, which has to be altered to give effect to the change of objective. The altered MoA is also filed with the Registrar with the application.
Where the Registrar deems it appropriate, they may ask for the adoption of a new set of Memorandum and Articles in line with the Companies Act, 2013.
Not in every case.
But where the existing name fails to reflect the new activities or any relation to them, the Registrar may direct that the name of the company be changed accordingly.
Yes, where the name change is being made because of the change in the main object, both procedures can be carried on simultaneously.
Because government approval is involved, the period can vary with the response and the time taken by the Registrar.
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Get the object clause updated before the new line starts trading.
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