A company has statutory power to alter the objects clause of its memorandum.
Under Section 8 (1) of the Companies Act a company may special resolution alter its objects clause.
A copy of the resolution must be delivered to the registrar for registration within 30 days thereof. Whereupon the alteration becomes legally effective.
However, under Section 8 (1) of the Act, a company can only alter the objects clause so far as may be necessary to enable it::
– Carry on its business more economically or more efficiently.
– Attain its main purpose new or improved means.
– Enlarge or change the local area of its operations
– Restrict or abandon any of the objects specified in the memorandum
– Sell or dispose off the whole or any part of its undertaking
– Amalgamate with any other company or body of persons.
– Carry on some other business which under existing circumstances may conveniently or advantageously be combined with the business of the company.
Under Section 8 (2) of the Act a proposed alteration of the objects clause may be objected to by:
Holders of not less than 15% in nominal value of the company‟s issued capital
Holders of not less than 15% of any class of shares of the company
Holders of not less than 15% of the company‟s debentures entitling them to object
Not less than 15% of the company‟s members.
Those objecting must be persons who did not consent or vote in favour of the alteration. The court may:
Make an order cancelling or confirming the alteration either wholly or in part and on such terms and conditions as it deems fit
Adjourn the proceedings for arrangements to be made to facilitate the purchase of the interests of dissentient members.