What Is The Object Clause Of Memorandum Of Association In A Company?

While starting a new company in India, you need to be aware of the various intricacies involved in the process. One such intricate document mandatory to register a pvt ltd company in India is the Memorandum of Association. This MOA is the charter document of the company and it should involve all the basic details that govern a company. If any company acts in a way that opposes its provisions of the MOA, it will be liable in company law. There are many integral components in the MOA and one such component is the object clause in company law. So, in this blog, we focus on what is object clause in memorandum of association and the need for the object clause in MOA.

What is object clause of memorandum of association?

The Memorandum of association has different clauses and the object clause is one of them. Every company has a specific business activity to conduct. So before moving ahead with private limited company registration, it is important to know the exact business of the company and its limits. Hence, it helps to describe such business activity in the MOA of the company.   

Also Read: What is the Memorandum of Association?

The purpose of object clause in MOA

The object clause of the MOA is its third clause. It comes after the name clause, and the registered office address clause. The purpose of the object clause in company law is to limit the business activities of a particular company to the extent mentioned in the object clause of memorandum of association. So, it is evident that this object clause is a very key aspect of the moa in company law.

Including business activity enables others to understand the scope of the company. While contracting with the company one should know whether the company can indulge in activities mentioned in the contract. So, you can check it from the object clause of MOA of the company. The MOA and AOA are the essential documents of the company. A company cannot undertake activities not mentioned in the MOA. Hence if a company works beyond the mentioned activity then it will be void ab initio.  

Also Read: Name Clause of MOA

Contents of object clause in company law

The object clause in MOA is divided into 2 parts:  the “Main object” and the “Matters which are necessary for the furtherance of the main objects”. To clarify:  

Main object 

All promoters of a company have some ideas. The main object in company law is to list such ideas in legal language. It will cover details concerning the business activities which the company is going to or will carry out.   

Matters which are necessary for the furtherance of the main objects

In this, points which are necessary to achieve the main objects of the company must be covered. It may include to purchase, sell a land/building, to apply/contract for intellectual property rights, technical assistance, to merge/amalgamate with any other person etc. The format has been provided by the government; one can add or remove the clause as applicable.  

Also Read: What is the minimum paid up capital for company?

What to include in the object clause of MOA?

The main object must include matters as mentioned below:

• A brief including all the activities carried on by a company. It can include manufacturing or service or trade covering all the areas;
• To cover business activities in more generic terms;
• To include supporting activities to the main business activity; and 
• One should also include related activities which can help to diversify the business in the future. 

Hence the object clause must be drafted covering major areas of the business. It must be written in a way that avoids revisions in the future.  

Alteration to the object clause of the memorandum of association

The meaning of private limited company suggests that it can only do the business as approved in its charter document, ie,. The Memorandum of Association. However, as a business owner, you register the MOA before your company registration process is over. So, it is not necessary that the object clause in Company law includes all proposed future business activities too. Hence, if you want to change the business activity for your company, you may need to alter the Memorandum of Association. 

So, whenever there is a need to change or amend the business activity, it can be done. However, a company will require approval from the Ministry of Corporate Affairs to change the business activity. Only after the Ministry’s approval, can a company do a new business activity.   For a detailed guide on the alteration of object clause of MOA, do read “How to alter the MOA in India”. 

Conclusion 

The object clause of the memorandum of association must cover all important business activity details. So it is exhaustive enough to carry on business operations smoothly. Being an essential part of MOA, it is recommended that some professional expertise is tapped to draft the clause.