PROCEDURE FOR CHANGE IN OBJECT CLAUSE OF NBFC

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Aayushi (Querist)
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01 June 2023 We want to change object clause of NBFC, whether we have to take prior approval from RBI before passing SR in EGM? Can anyone share draft documents for taking approval from RBI.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 July 2024 Yes, for changing the object clause of an NBFC (Non-Banking Financial Company), you typically need to obtain prior approval from the Reserve Bank of India (RBI) before passing a Special Resolution (SR) in an Extraordinary General Meeting (EGM). Here’s a general outline of the process and the draft documents you might need:

### Steps to Change Object Clause with RBI Approval:

1. **Prepare Resolution and Application:**
- Draft a Special Resolution (SR) to change the object clause in the Memorandum of Association (MoA) of the NBFC.
- Prepare an application to the RBI seeking approval for the proposed change in the object clause. This application should be detailed and include reasons for the proposed change and the potential impact on the business of the NBFC.

2. **Documentation Required:**
- **Covering Letter:** Addressed to the Regional Office of the RBI where the NBFC is registered, outlining the request for approval and providing an overview of the proposed change.
- **Board Resolution:** A certified copy of the Board Resolution approving the proposal to change the object clause and authorizing a director or an authorized signatory to sign and submit the application to the RBI.
- **Memorandum of Association (MoA):** Include a certified copy of the MoA reflecting the existing object clause and the proposed changes clearly highlighted.

3. **Additional Documents:**
- **Financial Statements:** Latest audited financial statements of the NBFC.
- **Business Plan:** A detailed business plan outlining the activities proposed to be undertaken under the revised object clause.
- **Other Relevant Documents:** Any other documents or information that may support the application, such as market analysis, future projections, etc.

4. **Submission to RBI:**
- Submit the application along with all required documents to the Regional Office of the RBI where the NBFC is registered.
- Ensure that the application is complete and meets all regulatory requirements as specified by the RBI.

5. **Follow-Up and Compliance:**
- Monitor the progress of your application with the RBI.
- Upon receiving approval, convene an EGM to pass the Special Resolution for changing the object clause in accordance with the approval received from the RBI.

### Draft Documents:

- **Sample Covering Letter to RBI:**

```
[Date]

The Regional Director
Reserve Bank of India
[Regional Office Address]

Subject: Application for Approval to Change Object Clause in Memorandum of Association of [Name of NBFC]

Dear Sir/Madam,

We, [Name of NBFC], hereby submit our application for your kind consideration and approval to change the object clause in the Memorandum of Association of our company.

We have enclosed the following documents with this application:
1. Board Resolution approving the proposed change in the object clause.
2. Certified copy of the existing Memorandum of Association highlighting the current object clause and proposed changes.
3. Business plan outlining the activities proposed to be undertaken under the revised object clause.
4. Latest audited financial statements of [Name of NBFC].
5. [Any other relevant documents as applicable].

We trust that you will find the enclosed information satisfactory for your review. We kindly request your prompt attention to this matter and look forward to receiving your approval at your earliest convenience.

Thank you for your cooperation.

Yours sincerely,

[Signature]
[Name of Authorized Signatory]
[Designation]
[Contact Information]
```

- **Board Resolution:**

```
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [Name of NBFC] HELD ON [Date]

"RESOLVED THAT pursuant to the provisions of Section ___ of the Companies Act, 2013 and other applicable provisions, consent of the Board of Directors be and is hereby accorded for change in the object clause in the Memorandum of Association of the Company, to align it with the revised business plan and activities proposed to be undertaken by the Company.

FURTHER RESOLVED THAT [Name of Director/Authorized Signatory], [Designation], be and is hereby authorized to sign and submit the application to the Reserve Bank of India for approval of the proposed change in the object clause, and to do all such acts, deeds and things as may be necessary, proper or expedient to give effect to the above resolution."

Certified true copy
[Signature of Director/Company Secretary]
[Name of Director/Company Secretary]
[Designation]
```

### Important Considerations:

- Ensure compliance with all applicable provisions of the RBI and Companies Act, 2013.
- Seek guidance from legal and financial advisors to navigate the regulatory requirements effectively.
- Maintain communication with the RBI throughout the approval process and address any queries or requests for additional information promptly.

By following these steps and using the draft documents provided as a template, you can proceed with seeking RBI approval for changing the object clause of your NBFC in a systematic and compliant manner.