The object clause of the memorandum of association is of utmost significance to a company, as the company can carry on only those activities, which are permitted by its object clause. However, a company can alter the object clause of its memorandum of association at any time by passing a special resolution. Alteration of object clause is governed by section 13 of the Companies Act, 2013.
Section 13(1) of the Companies Act, 2013 reads as below-
“13(1) Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum.”
Therefore, all the clauses of the memorandum of association except the capital clause can be altered by passing a special resolution. Capital clause can be altered by passing an ordinary resolution unless otherwise provided by the articles of association of the company. As per section 2(3) of the Companies Act, 2013, ‘alter’ or ‘alteration’ includes the making of additions, omissions and substitutions.
Procedure for alteration of object clause of the Memorandum of Association of a Company
1
Issue notice of the Board Meeting to every director at least 7 days before the date of the Board Meeting. A meeting of the Board may be called at shorter notice to transact urgent business subject to the specified conditions.
Annexure/attachment to the Notice-
- Agenda
- Notes to Agenda
- Draft resolution
2
Hold a board meeting
- To consider the alteration of the object clause and to pass a resolution for the alteration of object clause of the memorandum of association subject to the approval of the members of the company.
- To fix day, date, time and venue for holding a general meeting to obtain the approval of the members of the company.
- To approve the draft notice of the general meeting along with explanatory statement u/s 102 and authorise the company secretary or any director to sign and issue notice for the general meeting.
3
The special resolution should be passed through postal ballot in the following cases-
- Where provisions of Section 13(8) of the Companies Act 2013 are attracted in case of a public company.
- Where the company has more than 200 members.
- In case of a listed company.
4
Issue notice calling general meeting along with the explanatory statement u/s 102 at least 21 clear days in advance of the general meeting to all the members, directors, auditors, debenture trustee, secretarial auditors of the company and others who are entitled to it.
An EOGM may be called after giving shorter notice, if consent, in writing or by electronic mode, is accorded thereto, by majority in number of members entitled to vote and who represent not less than 95%, of such part of the paid-up share capital of the company as gives a right to vote at the meeting.
5
Convene the general meeting and pass a special resolution for alteration of the object clause. In case of a listed company or where a company has more than 200 members, the formalities regarding postal ballot should be followed.
6
File E-Form MGT 14 within 30 days of passing the special resolution.
Attachment-
1. Certified true copy of the special resolution along with explanatory statement
2. Notice of the General Meeting
3. Altered Memorandum of Association
4. Any other attachment as applicable
7
Every alteration made in the memorandum of association of a company shall be noted in every copy of the memorandum of association specifying the date and manner of passing the resolution
8
The ROC shall register the alteration and certify the registration within a period of 30 days from the date of filing of the special resolution.
Also read General Meeting Resolution for alteration of Object Clause of a Company