According to sub – section (8) of Section 13 of the Companies Act 2013 discussed earlier here, a Company, which has raised money from public and has a unutilised amount out of 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.
The prescribed details in respect of this special resolution shall be published in newspapers (one in English and another in local language) which are in circulation at place where registered office of the company is situated. These details shall also be placed on the Website of the company, if any. These details shall indicate the justification for such change in objects of the company.
All dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control of the company. This opportunity shall be given in accordance with regulation specified by the Securities and Exchange Board of India (SEBI).
In case of all other companies, like; one man company, Private Company or a public company which has not raised any money from public or a public company which has raised some money from public but has no unutilised amount out of money so raised, may alter its object clause only by passing a special resolution.
Rule 32 of the Companies Act 2014 elaborate this provision of Section 13(8), where the company has raised money from public through prospectus and has any unutilised amount out of the money so raised, it shall not change the objects for which the money so raised is to be applied unless a special resolution is passed through postal ballot and the notice in respect of the resolution for altering the objects shall contain the following particulars, namely:-
- the total money received;
- the total money utilized for the objects stated in the prospectus;
- the unutilized amount out of the money so raised through prospectus,
- the particulars of the proposed alteration or change in the objects;
- the justification for the alteration or change in the objects;
- the amount proposed to be utilised for the new objects;
- the estimated financial impact of the proposed alteration on the earnings and cash flow of the company;
- the other relevant information which is necessary for the members to take an informed decision on the proposed resolution;
- the place from where any interested person may obtain a copy of the notice of resolution to be passed.
The advertisement giving details of each resolution to be passed for change in objects which shall be published simultaneously with the dispatch of postal ballot notices to shareholders.
The notice shall also be placed on the website of the company, if any.
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