What is Memorandum of Association?

Memorandum of association is the charter of the company and defines the scope of its activities. Memorandum of association defines the relation of the company with the rights of the members of the company interest and also establishes the relationship of the company with the members.

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. Any act done by the Company that is beyond the objects and powers as mentioned in the Companies Act, 2013 shall be considered as ultra-virus making object clause one of the most importance clause. On registration of a Company, the subscribers decide upon the objects they want to pursue on incorporation but in case after incorporation they want to change the objects of the Company, they can do so by following the requisite legal procedure as prescribed under Section 13 of the Companies Act, 2013 read with Companies (Incorporation) Rules, 2014.

Alteration Requiring MOA Amendment

Name Clause: name change of the company.

Object Clause: change of the objective and further necessary matters of the company.

Registered Office Clause: change of location of registered office of a company from one state to other across different ROC.

Capital Clause: change in the authorized share capital of the company.

Liability Clause: alteration in the liability of the members of the company.

Procedure for MOA Amendment

Convene the Board Meeting of Directors with the agenda of suggesting alteration in the MOA and drafting the resolution. Decide upon the date, time and venue for holding the Extraordinary General Meeting and issue notice to all the members 21 prior to the date of EGM.

In the EGM, pass the special resolution and get approval for alteration in the MOA of the company.

Fill the form with ROC notifying the MOA Amendment within the 30 days of passing the special resolution.

The documents required while filing the MOA Amendment with the Registrar includes: certified true copy of special resolution, copy of notice of EGM, printed copy of Altered Memorandum of Association.

The filing of MOA Amendment with the ROC takes around 10-15 days, depending upon the government processing.

FAQs on Alteration of Objects Clause of MOA under Companies Act, 2013

1. A company dealing in trading of garments, if wishes to start dealing in paper product can do so i.e. whether a Company can altogether change or add business activity?
If a Company having the main object as trading of garments wants to start altogether a new business activity (i.e. suppose trading of paper product) can start it as well. The only compliance required on part of the Company would be to make proper reporting in Form MGT-9, AOC-4 and MGT-7.

2. Whether Form MGT-14 is on approval mode?
Yes, MGT-14 is on approval mode i.e. it has to be approved by the officials of the Registrar of Companies.

3. In the Form MGT-14, there is a tab “in case of alteration in object clause, whether there is any change in the industrial activity of the Company”; how the same is to be dealt with?
With respect to the said tab, we need to check whether the main object clause of the Company is being altered. If “yes” is selected, the form asks for the changed NIC code. We have to fill in the changed national industrial classification (NIC) code as per NIC Code, 2004.

4. What are the implications of object change under the provisions of Income Tax Act, 1961?
There is no implication as such under the provisions of the Income Tax Act, 1961. However, we must draft/alter the object clause very meticulously as only the expenses incurred for the main business or profession are allowed as deduction from the income.