INTRODUCTION

The business activity of a company is defined in its Memorandum of Association (MOA). In order to alter such activity, it is necessary to amend the main object clause in the MOA.

In Partnership Firm or Limited Liability Partnership Firm, business activity is specified in the Agreement.

METHOD OF CHANGE OF BUSINESS ACTIVITY

  • Business activity of a company can be changed by altering the main object clause of Memorandum of Association.
  • In case of Partnership Firm or Limited Liability Partnership Firm, business activity can be changed by amending the Partnership Agreement or LLP Agreement by executing the Supplementary Agreement.

OBJECT CLAUSE-MEANING & FEATURES

Object clause in MOA of the company specifies the main objects which the company will be pursuing and other objects which the company must carry out to achieve these objects.

Object clause is most important clauses of MOA, it defines the scope and extent of activities a company can undertake in its due course of business

A company cannot carry any activity other then those mentioned in its object clause of Memorandum of Association unless an alteration is made to the effect in the object clause.

HOW TO CHANGE THE OBJECTS CLAUSE OF MEMORANDUM OF ASSOCIATION (MOA) OF THE COMPANY

ACT OR PROVISION APPLICABLE: Chapter II Incorporation of Company and Matters Incidental Thereto Provisions of the Companies Act, 2013: Section 13: Alteration of Memorandum.

PROCEDURE OF ALTERATION:

  1. Conevne a Board Meeting (As per Section 173 and SS-1)

    Issue Notice of Board meeting, attach Agenda, Notes to Agenda and Draft Resolution.

  2. Hold the Board Meeting and pass Board Resolution for following purposes:
    • Approve proposed new objects of the company.
    • Approve the alteration of object clause and recommend the proposal for members consideration by way of special resolution.
    • Fixing the date, time and venue of the general meeting and authorizing a director or any other person to send the notice to the members of the company.
  3. Issue Notice of Extra-General Ordinary Meeting (EGM) to all the directors, members and auditors of company, notice shall specify the place, date, date and time of the meeting and contain a statement on the business to be transacted at the EGM.
  4. Hold the General meeting and pass special resolution.
  5. File E-form MGT-14 with the Registrar within 30 days of passing the special resolution with the following attachments: -
    • Certified true copy of the Board Resolution
    • Altered Memorandum of Association.
    • Certified true copy of special resolution along with explanatory statement.
    • Notice of Extra-Ordinary General Meeting.
    • Shorter notice consent, if any.
  6. Alteration in MOA: Upon receiving approval from the Ministry of Corporate Affairs, the company must amend all copies of the MOA.

HOW TO CHANGE BUSINESS ACTIVITY OF LIMITED LIABILITY PARTNERSHIP (LLP)

PROVISON APPLICABLE: Section 11(2)(c) of the LLP Act, 2008.

PROCEDURE:

  1. Check existing LLP Agreement
    We need to check if any restrictions for changes or alterations is mentioned in the agreement.
  2. Hold meeting of partners:
    To take existing partners or designated partners consent for alteration of existing LLP Agreement.
  3. Execution of Supplementary Agreement
    Draft and execute supplementary agreement to change object clause of the LLP, it must be executed on the stamp paper, notarized and witnessed by at least two individuals.
  4. Filling of the Supplementary Agreement
    File the supplementary agreement within 30 days of execution by filling E-form 3 LLP with the following attachments: -
    • Supplementary Agreement
    • Original LLP Agreement
  5. Approval of the form
    The LLP can start new business activities upon receiving the approval of the ROC will approve the form.

HOW TO CHANGE BUSINESS ACTIVITY OF REGISTERED PARTNERSHIP FIRM

Provision Applicable: Section 63 of the Indian Partnership Act, 1932.

The following forms as prescribed under I.P. Act 1932 accepted for various amendment in original Form-A and Form-C :-

Form No. V: For change of constitution of forms & addition or retirement of partner

Procedure:

  1. Draft a new Partnership Deed as per the changes in the constitution of the Firm.
  2. Fill Form in Capital Letters in Form No.
  3. Pay the Challan Fees with the respective Bank.
  4. Submit the application with the concerned Registrar of Firms of the State along with following
  5. Documents:
    • Xerox copy of Old Partnership Deed
    • Xerox copy of New Partnership Deed on a Stamp Paper of Rs. 1000 duly attested by the Notary of concerned town where the Registered Office of the Firm is situated.
    • ID Proofs of all the partners, along with the new admitted partners, if any, duly attested by Notary, Gudegted Officer or any Professional like CA/CS/CWA.
    • Copy of Receipt Challan deposited in the Bank.
    • The Xerox copies of Certificate A and C, issued at time of constitution of the Firm, duly attested by Notary, Gudegted Officer or any Professional like CA/CS/CWA.

After the application is submitted with the Registrar of Firms, the Registrar will look after the application and when the Registrar of Firms is satisfied that the application is complete in all respects and the applicant have duly complied all the provisions of the act, he shall record an entry of the statement in the Register of Firms and issue a Certificate A and Certificate D stating the Changes in the Partnership Firm.

BENEFITS OF REGISTERING A PARTNERSHIP DEED

  • Power to file case in a Court by a partner against the firm or other co-partners.]
  • Power to file case in Court by firm against 3rd parties
  • Power to claim set-off

FREQUENTLY ASKED QUESTIONS (FAQ’S)

Q. What is change of business/objects?

Alteration of objects clause of Memorandum of Association of the company under Section 13 of the Companies Act, 2013 and Change of LLP agreement of a Limited Liability Partnership as per Section 11(2)(c) of the LLP Act, 2008.

Q. What forms are filed for changing business of Company or LLP?

  • E-Form MGT-14 and its linked form E-MOA within 30 days of passing of special resolution
  • E-Form 3 and E-Form 4 LLP within 30 days of execution of LLP Agreement.

Q. What are the documents/attachments of E-Form MGT-14 & E-MOA?

Following are the required documents/attachments: -

  • Certified true copy of the Board Resolution
  • Altered Memorandum of Association
  • Certified true copy of special resolution along with explanatory statement
  • Notice of Extra-Ordinary General Meeting
  • Shorter notice consent, if any.
  • Digital signature of the authorized director

Q. When does the alteration of the Object Clause/LLP Agreement come into effect?

Any alteration/changes made into Object Clause/LLP Agreement will not take effect until the alteration has been approved by the Registrar of Companies.

Q. What is the procedure of alteration of object clause of MOA?

Following procedure is followed:-

  • Pass Board Resolution.
  • Special Resolution in the general meeting.
  • MGT-14 file to the ROC.
  • Approval of form by the ROC.
  • Incorporate the changed objects in the MOA.

Q. What is the procedure of changing business in a LLP?

  • Hold meeting of partners
  • Execution of Supplementary Agreement
  • Filling of the Supplementary Agreement E-form 3 LLP.
  • Approval of the form.

Q. What is the procedure of changing business in a Partnership Firm?

  • Draft a new Partnership Deed as per the changes in the constitution of the Firm.
  • Fill Form in Capital Letters in Form No
  • Pay the Challan Fees with the respective Bank.
  • Submit the application with the concerned Registrar of Firms of the State.

Q. What is the reason to change object clause?

  • To enhance the scope of its business.
  • To carry on additional business along with existing business of the company
  • Merger or Amalgamation with another company.
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