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Overview
Every company is incorporated with a specific set of objectives, mentioned in its Memorandum of Association (MoA). These objectives define the company’s scope of operations and activities. However, as the business grows, companies may need to diversify, expand into new sectors or align with market demands. In such cases, a change in the objects clause becomes necessary.
This alteration is a legal process governed under Section 13 of the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014. It requires proper approvals, documentation and compliance with prescribed procedures.
Why Change in Objects Clause is Required?
Companies may decide to alter their objects clause for several reasons:
- Diversification of Business – Expanding into new markets or industries.
- Adaptation to Market Trends – Shifting focus due to demand, innovation or competition.
- Business Restructuring – When companies merge, demerge or change their line of operations.
- Geographical Expansion – Entering new states, countries or regions.
- Funding Requirements – Investors may require modification of the object clause for the specific projects.
- Compliance & Legal Alignment – Ensuring that the company’s operations fall within legal and regulatory frameworks.
Process for Change in Objects of Company
- Board Meeting –Hold a meeting of the Board of Directors to approve the proposal and call an Extraordinary General Meeting (EGM).
- Notice for EGM – Send at least 21 clear days’ notice to shareholders, directors and auditors, along with an explanatory statement under Section 102 of the Companies Act.
- Passing of Special Resolution – At the EGM, shareholders must pass a special resolution approving the change.
- Filing with ROC – File Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the resolution, along with the altered MoA.
- Special case: If the company has raised money from the public via a prospectus and still has unutilised funds, the special resolution must also be published in newspapers (one English and one vernacular) and on the company’s website and dissenting shareholders should be given an exit opportunity.
- ROC Approval – The ROC examines the application and upon satisfaction, registers the alteration.
- Certificate of Registration of Alteration – The ROC issues a Certificate of Registration of Alteration of Memorandum, confirming the change.
Note: This is not a fresh certificate of incorporation unless it also involves a change of company name.
Documents Required
The following documents are typically needed to process the change in objects clause:
- Copy of the Board Resolution.
- Notice of EGM with explanatory statement.
- Copy of the Special Resolution passed at the EGM.
- Altered Memorandum of Association (MoA).
- Digital Signature Certificate (DSC) of directors or authorized persons.
- Filing forms (MGT-14 and, where applicable, INC-24).
Benefits of Changing Objects Clause
- Business Expansion – Enables entry into new business opportunities.
- Legal Compliance – Ensures company activities are legally valid.
- Investor Confidence – Aligns company objectives with investor expectations.
- Operational Flexibility – Adapts the company to changing market conditions.
- Growth & Competitiveness – Enhances the company’s ability to scale and to compete effectively and efficiently.
Post Objects Change Compliance
After approval from the ROC, the company must:
- Update the MoA and maintain updated copies at the registered office.
- Intimate changes to banks, investors, lenders and other stakeholders.
- Update records with relevant regulatory bodies, if applicable.
- Ensure that new business activities comply with any sector-specific regulations.
Fee Structure
The cost of altering the object clause varies based on company type and share capital. It generally includes:
- Government filing fees based on authorised share capital.
- Professional charges for drafting and filing.
- Additional fees/penalties if there is any delay in filing beyond the prescribed period.
Timeline
The indicative timeline for changing the objects clause is:
- Board & Shareholders’ approval: 7–10 days.
- ROC processing & registration: Usually 15–20 working days (subject to ROC workload).
- Overall completion: Typically, around 30 days, in line with the statutory limit for ROC registration.
FAQs
Changes can include adding new business activities, deleting outdated objectives or modifying existing objectives to reflect a broader or more specific business scope. Companies can also create “ancillary objects” to support the main objects.
Typically, the Board of Directors initiates the proposal. However, shareholders can also suggest changes, which then need approval through a formal Board and EGM process.
Not always. While ROC approval is mandatory, sector-specific businesses (like NBFCs, financial services, pharma or telecom) may also require consent from respective regulators before altering objects.
Yes. Companies can deliberately restrict certain types of business in the MoA, and any activity outside this restriction requires a formal alteration.
Generally, existing contracts remain valid. However, if the new objects conflict with current agreements, legal advice is recommended to avoid breach of contract or disputes.
No. Even for private limited companies, an Extraordinary General Meeting (EGM) with a special resolution is mandatory as per Companies Act provisions.
Altering the objects clause can allow the company to legally expand into new product lines or services, which can positively impact branding, marketing campaigns and investor perception.
While the law does not explicitly limit changes, frequent alterations without clear business justification may raise regulatory scrutiny and affect stakeholder trust.
Main objects define the core purpose of the company, while ancillary (or incidental) objects support and facilitate the main objects. Both can be altered, but main objects require a more formal process.
Yes. A well-defined and updated objects clause aligned with business expansion or diversification can make the company more attractive to investors, lenders and venture capitalists.
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