OBJECT CLAUSE

• The purpose for which the company is incorporated.
• Section 3(1) (c) – Company needs to mention incidental objects or ancillary objects.
• Any contract entered by Company beyond the object clause is ultra vires. The tribunal checks and decides whether the contract is beyond the object clause.

The object clause of the company is the third clause of MOA stating the business objectives and purpose for which the company is incorporated and any other matter considered necessary in furtherance thereof. Any act done by the company that is beyond the object empowered is considered to be ultra vires making the object clause one of the most important clauses. 

Primarily it is important to note that the object clause of the company can be divided into the following-

1. The objects to be pursued by the company on its incorporation i.e., the main objects
2. Matters which are necessary for the furtherance of the main objects i.e., incidental or ancillary objects

Main objects of the company are the ones that enable you to focus on the primary activity of the company, incidental or ancillary objects enables you to carry on things that you may require in the course of business to attain the main objects and other objects are those which a company may keep in store for future so that they may extend their business in coming times.

Example-

 If the main object of a company is to promote sports and provide long-term coaching for various athletic activities, its incidental or ancillary objects may be to organize seminars, meetings, conferences, to promote the object of the company or maybe to give scholarships, financial assistance, and grants for achieving its objectives. Its other objectives may be to purchase, takeover, acquire, or undertake assets or properties for carrying out its business activities suitable for the company.

Alteration of Object Clause:

1. Alteration of objects by a company that has not issued Prospectus

A company that has not issued a prospectus may alter its objects by passing a special resolution. The requirements for passing a special resolution is exempted for a company having members up to 200 (Rule 22 (16) of the company (management and admin) rules, 2014).

2. Alteration of objects by a company that has issued the Prospectus

A company that has raised money from the public and utilized

the amount so raised shall change the object clause by passing a special

the resolution, but if there is an unutilized amount out of the money so raised the

company has to comply with the following procedures-

a.Notice in respect of the resolution sent to the members for altering the objects shall contain the following particulars.

• Total money received 

• Total money utilized

• Unutilized amount of money for a particular objective.

• Particulars of the proposed alteration

• Justification of the alteration     
• Amount proposed to be utilized for the new object

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.