Change in the Object Clause
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Table Of Content
Change in the Object Clause
The Object Clause in a company’s Memorandum of Association (MoA) plays a vital role in defining the scope of activities the business can legally engage in. Essentially, it outlines the company’s primary objectives and the nature of its operations. Over time, as market conditions evolve and business strategies shift, companies may need to modify their Object Clause to stay relevant, competitive, or compliant with new regulations. Whether a business is expanding into new industries, merging with another entity, or responding to regulatory changes, amending the Object Clause ensures that the company’s operations remain lawful and strategically aligned. In India, any changes to the Object Clause must strictly follow the provisions of the Companies Act, 2013, ensuring full compliance with corporate governance standards.
Why Change the Object Clause?
Eligibility for Object Clause Amendment
Process of Changing the Object Clause
Step 1
Step 2
Step 3
Step 4
Step 5
Documents Required for Object Clause Amendment
FAQs
What is the Object Clause in the MoA?
The Object Clause defines the scope of activities a company can legally undertake. It outlines the primary purpose and operations of the business.
Why do companies change the Object Clause?
Companies amend the Object Clause to diversify their business activities, comply with new regulations, or realign their strategic objectives.
What is the process for changing the Object Clause?
The process involves approval from the board of directors, a special resolution passed by shareholders, and filing the necessary forms with the Registrar of Companies (RoC).
What is a Special Resolution in the context of Object Clause changes?
A Special Resolution requires at least 75% approval from the company’s shareholders to make amendments to the Object Clause.
What forms need to be filed for changing the Object Clause?
Companies must file Form MGT-14 with the RoC, along with a copy of the Special Resolution and amended Memorandum of Association (MoA).
Is shareholder approval necessary for changing the Object Clause?
Yes, shareholder approval is mandatory. The amendment cannot be processed without the consent of at least 75% of the shareholders.
Can companies remove objectives from the Object Clause?
Yes, companies can remove or modify objectives through the same process used for adding new objectives to the Object Clause.
Can the Object Clause be changed multiple times?
Yes, companies can amend the Object Clause as many times as needed, following the proper procedure each time.
What happens if a company does not update its Object Clause?
If a company operates outside its stated objectives without updating the Object Clause, it may face legal penalties and other consequences.
What is Form MGT-14?
Form MGT-14 is used to file resolutions with the RoC, including changes to the Object Clause. This form is essential for legally documenting any amendments made to the MoA.