Changing the Objective of Business

Change Objective of Company - Overview

Amending the objectives of a company necessitates the modification of its Memorandum of Association, a procedure governed by Section 13 of the Companies Act 2013, which applies to all companies. This section stipulates that altering the company's objectives requires a special resolution, and upon such approval, the Registrar is obliged to register any changes to the memorandum pertaining to the company's objectives and provide certification of the registration.

The Object clause delineated in the Memorandum of Association elucidates:

• The principal business endeavor of the company (Main object)
• Adjunctive activities indispensable for the facilitation of the principal business activity (Ancillary objects)

Why Change Company Objective

The objectives outlined in a company's Memorandum of Association confine its operational scope. Consequently, altering these objectives becomes imperative in the following scenarios:

• Undertaking New Ventures: As a company expands vertically or horizontally into novel domains, introducing new products, services, or activities, adjusting the firm's objectives becomes necessary to accommodate these expansions.
• Company Takeover: In the event of another company acquiring control, substantial changes often occur. Although the original company's branding may persist, the company's direction and vision frequently undergo modification.
• Elimination of Abandoned Activities: Over time, certain activities within the company may become obsolete or impractical. In such instances, these activities are gradually phased out, prompting the need to revise the company's objectives to reflect this evolution.
• Compliance with Regulatory Changes: Government policies are subject to fluctuation, potentially rendering activities that were once legal now prohibited or restricted. To mitigate legal risks, it's crucial for the company to discontinue such activities and amend its objectives accordingly.

Process of Changing Objective of Company

To amend its main object or ancillary objects, a company must adhere to the following process:

Step 1: Pass board resolution

At the board meeting, approve the object clause by passing a resolution. During the meeting, a director or the company secretary will have the authority to sign, certify, and submit the necessary paperwork to the RoC. Additionally, the Extra Ordinary General Meeting of members' date, time, and location will be determined by the Board of Directors.

Step 2: Special Resolution in EGM

Members will approve a special resolution at the EGM. It is received the members' response to the special resolution. Notice should be sent to all members with specific required information. The resolution is passed once this notice is distributed.

Step 3: MGT-14 to be filed with RoC

For further processing, the company and its director(s) must file the form MGT-14 with the RoC. The form must have a few more documents attached for the same.

Step 4: Issuance of Fresh Certificate of Incorporation

Should the industry code change and the CIN number changes as well, the RoC will reissue the company's certificate of incorporation.

Step 5: Incorporating object clause in MoA and AoA

The company needs to make sure that every copy of the MoA has the object clause in it once the RoC issues the incorporation certificate.

Document Required for change objective of company

• Notification about the EGM
• Attested copy of the special resolution
• Board meeting and EGM minutes
• Copy of the Board Resolution
• Modified MoA
• An optional certified genuine copy of the board resolution
• Identification proving each of the company's directors
• Address proof for each of the company's directors
• attendance record or register for general and board meetings