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Doubt in Co.Law (Alteration of Object clause)

CA Himanshu Bansal (Risk Manager) (2345 Points)

31 March 2011

I noticed some contradiction in answer in Institute's practice manual and a Reference book of Munish Bhandari for Law :

Question :

The management of Ambitious Properties Ltd has decied to take up the business of food processing activity because of the downward trend in real estate business.There is No provisions in object clause of Memorandum of Association to enable the company to carry on such business.State with reasons whther its object clause can be amended.

Answer :

As per ICAI Practice Manual - " No, as per Section 17 of Companies Act 1956"

As per Munish Bhandari Book " Alteration is permissible if it enable the company to carry on business which under existing circumstances may conveniently or advantageously be combined with the business of the company "

Pls clarify.

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5 Replies

khanna (CA FINAL ICWAI FINAL) (283 Points)
Replied 31 March 2011

as per my knowledge concerned ,

company to carry on business which under existing circumstances may conveniently or advantageously be combined with the business of the company

but here in the case of Ambitious Properties Ltd the buisiness of food processing activity cannot be conveniently or advantageously be combined with the buisiness of real estate

as food processing is completely different from real estate

as the same case in punjab distilling company

here also buisiness of distilling cannot conveniently or advantageously combined with the business of film

hope you clarified

the above discussion is only as part of my knowledge !

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CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 02 April 2011

Still confusion is there, I consulted in some other forums also.. some says the company can do so, and some says compnay cannot do so..

Anyways, thanks for your valuable reply !

khanna (CA FINAL ICWAI FINAL) (283 Points)
Replied 02 April 2011

a company which was formed for the purpose of gererating power was allowed to carry on cold storage buisiness

because gererating power and cold storage are very nearer to each other

but real estate buisiness and food processing activity is completely different from each other

so in my opinion icai is correct

and hope you might clarified with the above discussion

1 Like

siddharth jain (ca- ipcc) (197 Points)
Replied 10 April 2011

it depends on facts and circumstances of each case . it is always possible to carry on both the business if they satisfy the conditions mentioned in section 17.