Change Your Company’s Objectives Comfortably
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Changing Name & Objectives - Overview:
As your company grows and evolves, it is normal that you want to take your company in a direction that you didn’t anticipate before. When the objectives of your business change, it is necessary to make it official by amending the memorandum of association (MoA) and fulfilling other formalities for the same.
Registerkaro's service can make this whole process easy for you and pave the way for a comfortable transition into a new phase for your business.
Changing objectives of a Company
Object clause mentioned in Memorandum of Association of a company explains–
1. Main business activity of the company (Main object)
2. Activities which are necessary for conducting the main business activity (Ancillary objects)
A company may want to change its main object or the ancillary objects. To get this done a company has to follow these steps:
Step 1: Pass board resolution
Pass a resolution at the board meeting to approve the object clause. A director or the Company Secretary of the company will be authorised in the meeting to sign, certify and file the required forms with the RoC. Also, the Board of Directors will fix a day, time and venue of Extra Ordinary General Meeting of members.
Step 2: Special resolution in EGM
In the EGM, a special resolution will be passed by the members. Specific clause in passing special resolution If a company has raised funds from the public by issuing prospectus and possesses some unutilised funds out of those, it has to make some disclosures along with passing a special resolution.
The special resolution of the members will be obtained by postal ballot. A notice will be issued to the members which will contain the details –
Total money received (from public by issuing prospectus)
Total money utilized for the objects stated in the prospectus
Unutilized money out of the total money received by issuing prospectus
Details for the proposed change in the objects
Justification for the change in the objects
Amount proposed to be utilized for the new objects
Estimated financial impact of the proposed change on the earnings and cash flow of the company
Other relevant information
The place from where a person interested can obtain a copy of the notice of resolution to be passed.
The special resolution will be published in the newspapers (one in English and one in vernacular language) in the city where the registered office of the company is located.
SR will also be placed on the website of the company.
Dissenting shareholders (who vote against the decision of object clause) will be given an opportunity by the promoters and other shareholders to exit.
If the company hasn’t received any funds from the public, or the funds received are fully utilised, then the company is not required to make the disclosures, only the special resolution would be enough.
Step 3: MGT-14 to be filed with RoC
Once the special resolution is passed at the EGM, the authorised director or the company secretary will file Form MGT-14 with the RoC. Along with MGT-14, other documents to be filed are–
Certified copy of the special resolution
Notice of Extra Ordinary General Meeting (EGM)
Explanatory statement to the notice
Altered Memorandum of Association
Step 4: Issuance of fresh certificate of incorporation
After receiving MGT-14, the RoC will examine the form, and if they are satisfied, they will register the change in object clause by issuing a fresh certificate of incorporation. Object clause change is not completed until the RoC issues a fresh certificate of incorporation.
Step 5: Incorporating object clause in MoA and AoA
Once the certificate of incorporation is received from the RoC, the object clause must be incorporated in all the copies of Memorandum of Association.
Why Change Business Objectives?
Eliminate Abandoned Activities: It might so happen that, over time, some of the activities of the company may prove to be unnecessary or pointless. In which case these activities will be slowly abandoned and the company will have to edit the objectives to reflect the same.
Banned or Prohibited Activities: Government policies keep changing. Sometimes an activity that was legal when the business started may be declared illegal or the government may restrict permissions. In such cases, your company should avoid that activity and amend the objectives to avoid legal consequences.
Undertaking New Ventures: When your company is expanding vertically or horizontally into new areas resulting in new products or services or activities, the objectives need to be changed to accommodate it.
Company Takeover: When a company is taken over by another company, major changes take place. The branding of the original company may continue to remain the same, but more often than not, the direction and vision for the company are changed.
The business objectives stated in the MoA restrict the scope within which a business can act. So, changing objectives is necessary for the following situations:
Process to Change the Objective of the Company
The MoA explains the two major objectives of the business:
Main object: Covers the major business activities of the company
Ancillary object: Covers the necessary activities for conducting the business plans and needs.
To get these objectives changed, you will need to follow the 5 steps:
Step 2: Special Resolution in EGM
In the EGM, a special resolution will be passed by the members. The reply of the members to the special resolution is obtained. All the members should be given notice with certain mandatory information. Once this notice is circulated, the resolution is passed.
Step 1: Board Resolution
A meeting of the board should be held and a resolution has to be passed to make the essential changes in the name and objectives of the company. A director/company secretary should be authorised to sign, certify, and file the required forms with the RoC.
Following that, a place and time will be fixed for conducting an extraordinary general meeting (EGM) of members.
Step 3: File form MGT-14 with RoC
The form MGT-14 needs to be filed with the RoC by the company and its director(s) to process further. Some other documents need to be attached with the form for the same (listed below).
Step 4: Issuance of Fresh Certificate of Incorporation
In case the CIN number changes due to a change in the industry code, the RoC will issue a new certificate of incorporation to the company.
Step 5: Incorporation of the MoA Object Clauses
After the RoC issues the incorporation certificate, the company must take steps to incorporate the object clause in all the MoA copies.
Documents Required to change Objectives/Activities of your company
1.Notice regarding EGM
5.A certified true copy of the board resolution
2.Attested true copy of the special resolution
3.Minutes of the board meeting and EGM
4.Altered Memorandum of Association
6.Id proof of all the directors of the company
7.Address proof of all the directors of the company
8.Attendance sheet or register of board and general meetings
Why Registerkaro to change your company's Objectivies/Activities
Here is why you should choose Registerkaro for changing the objects of your company:
Simple and speedy process
Experts will guide you in deciding what to add under main and ancillary objectives
A resolution drafted and forms filled & filed for you
We will make the amendments to your MoA
You get the best support
All your queries will be answered.