Change in Object Clause

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What is MOA - Memorandum of Association

Updated on December 31, 2022 04:39:28 PM

Memorandum of Association (MOA) of any Company is the foundation of any company which is being incorporated. MOA is the constitution of the Company as well it defines the scope of powers and rights within which a Company operates. Provisions of Law prevail in case there is any conflict between the Companies Act and Clauses in Memorandum.

Objects are the part of Memorandum that defines the objectives of the Company for which it is being formed. The Company cannot operate beyond its object clause. 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.

Contents of MOA

The Memorandum of Association (MOA) of a company typically comprises the following clauses:

Name Clause:
This initial clause states the name of the company, followed by terms like Private Limited, Limited, OPC Private Limited, depending on the type of company. However, this requirement does not apply to Section 8 Companies.

Registered Address Clause:
This clause specifies the state where the company’s registered office is located.

Object Clause:
The Object Clause delineates the purposes for which the company is established and operates.

Liability Clause:
This clause specifies whether the liability of the members is limited or unlimited.

Capital Clause:
The final clause outlines the company’s capital structure, including the Authorized Capital divided into shares. The Authorized Capital represents the maximum amount for which the company is authorized to raise funds.

The Process to Amend Object Clause of Company’s MOA

To amend the object clause of the Memorandum of Association and add additional business activities, the following secretarial procedure must be followed:

Hold a Board Meeting:
Send a notice at least 7 days in advance to convene a Board Meeting to discuss the following agenda:

Seek approval from the directors to amend the object clause of the Memorandum.
Determine the date, time, and venue for calling an Extraordinary General Meeting (EGM) to obtain shareholder approval for the change in the object clause.
Approve the notice of the EGM, including the agenda and an explanatory statement as required under Section 102 of the Companies Act 2013.
Conduct the EGM:
Obtain shareholder approval through a special resolution passed during the EGM. The resolution must be passed by a three-fourths majority vote. For listed companies, after passing the resolution, the company must provide a copy of the resolution and relevant details to the stock exchange where its shares are listed. Special Resolution must be passed by Postal Ballot in the following cases:

Companies with more than 200 members.
Companies with unutilized funds raised through the issuance of a prospectus.