Before going to the procedure, let’s have a look at the meaning of Memorandum of Association of the Company.
Section 2(56) of the Companies Act, 2013, defines memorandum as the memorandum of association of Company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act.
Memorandum of Association is the charter or constitution of the Company which defines the scope of its activities and objectives. In any scenario, no Company can act against the provisions of its Memorandum, and if it does so, such transaction will be ultra vires and hence void. In case, the Company enters into a contract, any arrangement or agreement with any third party, such Memorandum is used as a public document.
The object clause of the Company is the third clause of Memorandum of Association of any Company stating the objects i.e. the business/purpose for which the Company is incorporated and any other matter considered necessary in furtherance thereof.
In case the Company wants to carry on its business on a larger scale by enhancing the scope of its activities or to carry on such additional business that can easily be combined with the existing business of the Company, they can do so by changing its main objects clause by following the requisite legal procedure and passing Special Resolution as prescribed under Section 13 of the Companies Act, 2013 read with Companies (Incorporation) Rules, 2014.
The procedure for change in object clause is as follows:
Step 1: Calling of Board Meeting
First call a board meeting by giving a clear 7 days’ notice for approval of change in object clause and to call Extra Ordinary General Meeting for Shareholders approval. A detailed agenda along with notes to agenda and proposed Board Resolutions should be attached with the Notice.
Step 2: Hold the Board Meeting
In the Board Meeting take the approval of directors to amend the object clause of Memorandum. After Board’s approval, fix the date, time and venue to call the Extra-Ordinary General Meeting to get shareholders’ approval for change in object clause. Approve the notice of EGM along with agenda to be discussed and an explanatory statement as per section 102 of Companies Act 2013.
Step 3: Issue notice of General Meeting
Issue clear 21 days’ notice of Extraordinary Meeting to all Members, Directors and the Statutory Auditors of the Company in accordance with the provisions of Section 101 of the Companies Act, 2013 along with explanatory statement as per Section 102 of the Companies Act, 2013 detailing the reasons for change in object clause. Interest of the Directors in the resolution should be disclosed in the explanatory statement.
Step 4: Hold the General Meeting
Hold the Extraordinary General Meeting to take shareholders’ approval for change of object clause and draft altered Memorandum of Association by passing a Special Resolution under Section 13(1) of the Companies Act, 2013. The resolution shall be passed by the three-fourth of the majority.
Step 5: Filing with the Registrar
After passing the Special Resolution, the Company shall file the resolution passed with the concerned Registrar in Form MGT-14 along with prescribed fee
within 3o days of passing such resolution.
Attachments with Form MGT-14
- Certified copy of the Special Resolution along with the explanatory statement
- Altered Memorandum of Association
- Notice of Extra ordinary General Meeting
- In case the EOGM is held at a shorter notice, then the consent as received from the shareholders.
Step 6: Approval by Registrar
The Registrar will examine and register the alteration and issue a certificate which will be the conclusive evidence that all the requirements with respect to the alteration have been duly complied with by the Company. The alteration shall be complete and effective only on the issue of certificate by the Registrar.
Note: The Company needs to incorporate the alteration and certificate issued by the Registrar in every copy of the Memorandum of Association.
The Memorandum of Association or MOA is the document with collection of clauses that defines the scope of a company.