Commencement of new line of business by Private Company

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Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2011 Dear All,

A private company "X" is in a business of builders and wants to start a new line of business in textiles.

Kindly let me know the procedure to be followed if....
1. Other objects clause has such cluase stating that company can start new line of business any time or specifically states that company can start textile business any time.
OR

2. No such clause is included in other objects of the MOA of the Company.

Please also state the reference where i can find it.

Thanking you in anticipation.

Chintan

udit sharma

udit sharma (Expert)

14 February 2011 Hi..

Commencement of business stated in 'Other Objects Clause' requires the consent of the members by way of a Special resolution in the General Meeting of the Company as per the provisions of section 149(2A) of the Companies Act, 1956 and a declaration to this effect in Form 20A is to be filed by a Director or Company Secretary of the Company. If there is no Company Secretary, such declaration is to be filed by a Company Secretary in whole time practice. In case the number of votes cast in favour of the resolution is not 3 times the votes cast against the resolution but exceeds the votes cast against the resolution, in such case you can commence the business stated in Other Objects Clause, after obtaining the approval of the Central Government in this behalf.

2) In this case, you will have to insert the new clause in the MOA of the Company by obtaining the consent of the members under section 17 of the Companies Act, 1956 and then obtain the approval of the members under section 149(2A) of the Companies Act, 1956 for commencing new line of business which is not germane to the existing business.

God Bless

CS Udit Sharma

Querist : Anonymous

Querist : Anonymous (Querist)

15 February 2011 Thanx Mr. Udit Sharma.

My further query is that if in option 2 if i include textile business in a MOA of the Compnay which is in builders business(Construction of Building etc), the name of the Company does not reflect the Main objects of the Company.
So can i include the same clause in other objects and follow the procedure as stated to start new line of business?

If you can provide some reference then it will be of great help..

Chintan