The object clause is the purpose statement of the company. It defines:
The purpose for which the company has been set up
The company's actual capability and sphere of activities
The clause must state "the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof".
## Freedom of Subscribers
Subscribers enjoy almost unrestricted freedom to choose the objects. The only restriction: the objects must not be illegal or against the provisions of the Companies Act, 2013.
## Alteration of Object Clause (Section 13)
### Basic Procedure
Step
Action
1
Pass a special resolution in general meeting (by postal ballot if public company)
2
File Form MGT-14 with ROC within 30 days of passing the SR, along with the altered memorandum
3
ROC registers and certifies the registration within 30 days of filing
4
Effective date = date when ROC registers the alteration
### Special Protection: Where Money Was Raised from Public via Prospectus
If a company has raised money from public through prospectus and any unutilised amount remains, it cannot change the objects unless:
1. A special resolution is passed (through postal ballot)
2. Exit option is given to dissenting shareholders as per SEBI regulations
3. Advertisement is published in one English and one vernacular newspaper (in circulation where the registered office is located) AND placed on the company's website, indicating justification for the change
### Notice for Postal Ballot - Mandatory Particulars [Section 13(8)]
The postal ballot notice must contain:
Particular
(a) Total money received
(b) Total money utilised for the objects stated in prospectus
(c) Un-utilised amount out of money raised
(d) Particulars of the proposed alteration/change
(e) Justification for the change
(f) Amount proposed to be utilised for new objects
(g) Estimated financial impact on earnings and cash flow
(h) Other relevant information for members
(i) Place where any interested person may obtain copy of resolution notice
### Dissenting Shareholders' Exit
Dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control, as per SEBI regulations.
### Registrar's Role [Section 13(9)]
ROC shall register the alteration of objects and certify the registration within 30 days from the date of filing of the special resolution.
### Effect of Alteration [Section 13(10) & (11)]
Sub-section 10: Alteration takes effect only after registration as per Section 13.
Sub-section 11: For a company limited by guarantee not having share capital, any alteration of memorandum intending to give any person a right to participate in divisible profits otherwise than as a member shall be VOID (confirms Section 4(7)).
Worked example
### Example 1
Example 1 — Postal Ballot for Object Change
ABC Ltd, a public company, raised ₹50 crore via prospectus in 2024 for setting up a textile manufacturing unit. By 2026, only ₹30 crore has been utilised; ₹20 crore is unutilised. The Board now wishes to redirect the unutilised funds to a real estate venture.
Procedure required:
1. Convene Board meeting and approve the change in object.
2. Pass a special resolution through postal ballot (not show of hands) — public company.
3. The postal ballot notice MUST disclose:
Total ₹50 crore received
₹30 crore utilised for textile
₹20 crore unutilised
Proposed change to real estate
Justification, financial impact estimate, etc.
4. Advertise the change in one English + one vernacular newspaper + on company's website.
5. Provide exit option to dissenting shareholders per SEBI regulations.
6. File Form MGT-14 with ROC within 30 days.
7. ROC registers within 30 days; alteration effective from date of registration.
### Example 2
Example 2 — Guarantee Company Trying to Share Profits
Green Foundation Ltd, a company limited by guarantee not having share capital, proposes to alter its memorandum so that a senior consultant (not a member) can receive 10% of annual divisible profits as remuneration linked to surplus.
Answer: Such alteration is VOID under Section 13(11). A guarantee company without share capital cannot give any non-member a right to participate in divisible profits.
⚠️ Common exam mistakes
Confusing the 'effective date' of alteration with the date of passing the special resolution — alteration is effective only on ROC's registration.
Forgetting that postal ballot is mandatory for public companies for change of object — ordinary general meeting voting is not sufficient.
Missing the advertisement requirement (English + vernacular newspaper + website) when unutilised prospectus money exists.
Overlooking the dissenting shareholders' exit requirement under SEBI regulations.
Treating Section 13(11) as applying to all guarantee companies — it applies only to guarantee companies NOT having share capital.
Bare-Act text Section 13(8), 13(9), 13(10), 13(11) · Companies Act, 2013 · click to expand
Section 13: Subject to the provisions of section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum.
Sub-section (8): A company, which has raised money from public through prospectus and still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through prospectus unless a special resolution is passed by the company and—
(i) the details, as may be prescribed, in respect of such resolution shall also be published in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated and shall also be placed on the website of the company, if any, indicating therein the justification for such change;
(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the Securities and Exchange Board.
Sub-section (9): The Registrar shall register any alteration of the memorandum with respect to the objects of the company and certify the registration within a period of thirty days from the date of filing of the special resolution in accordance with clause (a) of sub-section (6) of this section.