Other object in private company

[Naveen Shree Pandey]

Respected colleagues,

 

How can a company can start business mentioned under other object of the MOA of the Company

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Thanks and Regards

 

Naveen Shree Pandey

 

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[sachin kumar]

Dear Naveen

There are three type objects of a company in MOA:

1. Main objects
2. Ancilliary objects
3. Other objects

A public limited  company or listed company can pursue other objects business only after:

 

Procedure for commencement of other objects  business by an existing company

 

1.    Convene Board Meeting after giving notice to all the directors [Section 286] to discuss besides others the following matters. ·             To approve the proposal for commencement of new business. [Section 149 (2A)] ·             To fix the date, time and place for convening the General Meeting of shareholders. ·               Issue and despatch notices in writing at least 21 clear days before the date of   the   General Meeting  [Section 171(1)] [Agenda] 2.    Inform the Stock Exchange with which shares of the company are listed about the date of this meeting prior to the board meeting. [Clause 19 of the Standard Listing Agreement] 3.    Inform the said Stock Exchange within 15 minutes of the board Meeting, of the outcome of the meeting by letter or fax. 4.    Hold and convene the General Meeting and pass the [Special Resolution]. 5.    If a special resolution could not be passed but instead a [Ordinary Resolution] is passed, apply to the Central Government for its approval. 6.    Forward 3 copies of the notice and copy of the minutes of the general Meeting to Stock Exchange with which the shares of the company are listed. [Clause 31 (c) and (d) of the Standard Listing Agreement] 7.    In case Special Resolution has been passed, file [E-form no 23] with the concerned Registrar of Companies within 30 days with the following documents: Special Resolution Explanatory Statement. 8.    Make the payment of requisite fees prescribed by the Companies [Schedule X of Companies Act, 1956]. 9.    Fees can be paid through Credit Card / by cash / by cheque in favour of “MCA Collection Account ICICI Bank” at the prescribed rates. (Fee Calculator) 10.    File a declaration in [E-form no 20A] on the stamp paper of requisite value as required by the stamp act of the respective states with the concerned Registrar of Companies along with the following documents : Special Resolution  ( In case Special Resolution has been passed) Explanatory Statement  ( In case Special Resolution has been passed) Copy of Central Government approval in case required. Scan copy of E-form 20A duly executed on stamp paper. 11.    Make the payment of requisite fees prescribed by the Companies [Schedule X of Companies Act, 1956]. 12.    Fees can be paid through Credit Card / by cash / by cheque in favour of “MCA Collection Account ICICI Bank” at the prescribed rates. (Fee Calculator) 13.    In case application has to be filed with the Central Government, the application should give all relevant information including justification and reasons for commencement of the new business as well as reasons for the special resolution not having been passed. The following documents must be attached with the application: A certified true copy of the notice of the meeting and the explanatory statement. A certified true copy of the resolution passes at the general meeting.  A certified true copy of the Memorandum and Articles of Association. Particulars as to the number of members who attended the meeting either in person or by proxies, manner of voting, the number of votes cast in favour and against the resolution. A demand draft or challan for the fees paid under the Companies (Fees on Application ) Rules, 1999. 14.    Deposit a copy of the application filed with the Central Government with the concerned Registrar of Companies. 15.    File a copy of the order received from the Central Government with the concerned Registrar of Companies.  NOTE According to sub-section (2A), if a public company having a share capital, whether or not it has issued a prospectus inviting the public to subscribe for its shares, wishes at any time to commence a new business, it will have to comply with the requirements stipulated in this section. The Memorandum of Association states the Objects for which the company has been incorporated. Any business carried on by the company must be covered in the Objects Clause in the memorandum. Likewise, any new business which the company proposes to carry on must be covered in the Objects Clause in the memorandum. If the Objects Clause does not include it, the same must be first altered to have it included. The new business should not be germane to the business of the company. Germane means relevant (to a subject under consideration), closely akin, having a close relationship. In the DCA's view, the criterion to decide whether compliance with the requirements under sub-section (2A) is necessary or not, is whether the new activity is germane to the original business or not. In case the reply is no such compliance is necessary and vice versa. A company which was incorporated after 15 October, 1965, i.e. the date of commencement of the Companies (Amendment) Act, 1965, has the Objects Clause in its memorandum of association divided into three classes (a) Main objects; (b) Objects incidental or ancillary to the attainment of the main objects; and (c) Other objects. In the case of such a company, any business commenced by the company immediately on its incorporation and carried on must be covered in the Main Objects. Any new business a company proposes to commence must be covered in the Other Objects in the memorandum. Thus, if such a company proposes to commence any business which is included in the Other Objects, the company must comply with the requirements of sub-section (2A), before the business is commenced. Before commencement of such new business at any time, the requirements under sub-section (2A) must be complied with.

 

How can a company can start business mentioned under other object of the MOA of the Company

 

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Thanks & Regards

 Sachin Pyare

[Naveen Shree Pandey]

Dear Sachin,

 

Thanks for sharing the procedure. But i want to know that how a private company can start the business written in its other objects???? Do it require only a board resolution???

 

Thanks and Regards

 

Naveen

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[sachin kumar]

read section 149(2A) and then read section 149(7).this is not applicable on a Private Co.