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Procedure for Change in Object Clause of NBFC

The process of Change in object clause of NBFCs is almost similar to a normal private limited company or Limited company but as first step is you need RBI Approval in advance. <br>Change in object clause example Assets finance company wish to convert to a loan company or vice versa.<br>Change in object clause should be strategically planned keeping in mind of the assets size of the company.<br>

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Procedure for Change in Object Clause of NBFC

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  1. Changeinobjectclause www.enterslice.com

  2. WhatisChangeinobjectclause? WhatisChangeinobjectclause? • TheprocessofChangeinobjectclauseofNBFCsisalmostsimilar toanormalprivatelimitedcompanyorLimitedcompanybutas firststepisyouneedRBIApprovalinadvance. • ChangeinobjectclauseexampleAssetsfinancecompanywishto converttoaloancompanyorviceversa • Changeinobjectclauseshouldbestrategicallyplannedkeepingin mindoftheassetssizeofthecompany • Recoveryfromthecustomershouldbeplannedinadvancebefore proceedingtochangeintheactivityofanNBFC

  3. WhendoyouneedtochangetheobjectclauseofNBFC?? WhendoyouneedtochangetheobjectclauseofNBFC?? • GenerallyinNBFCfoundersoptforchangeinthebusinessactivity afterthetakeoverofNBFC.Foranexample,AFChavebeentakeover forthepurposeoflendingactivity. • ExistingNBFCmayexperiencedbetteropportunityinothertypesof NBFClikewiseAFC/LC/IFC/VC • Tocarryonanyotherbusinesswhichmaybecombinedwiththe existingbusinessofthecompany. • PostMerger/Takeover/AmalgamationofNBFCmayneedtochange theobjectclause

  4. Compliancerequirementforchangeintheobject clauseofanNBFC • ChangeinobjectclauseofthecompanyinvolvesalterationofMemorandumof Association(hereinafterreferredtoas“Memorandum”)oftheCompany.Main provisionsrelatedtoalterationofMemorandumaregiveninSection13ofthe CompaniesAct,2013readwithCompanies(Incorporation)Rules,2014. ApplicabilityofSection13ofcompaniesAct: Section13ofcompaniesAct,regulatestheprocessofamendmentin MemorandumofAssociationisapplicabletoallthecompanies. ForalterationofanyclausesofMemorandum,consentofmembersbywayof specialresolutionisrequired. - ApprovalfromRBIismandatory

  5. Continue….. • TheRegistrarshallregisteranyalterationofthememorandumwith therespectsofthecompanyonlyifithasbeenapprovedbytheRBIin advance,acopyofRBIapprovalmustbeattachedwiththeMCA- forms.NecessaryROCcompliancemustbecompletedwithin30days fromtheRBIapproval • Noalterationmadeunderthissectionshallhaveanyeffectuntilits hasbeenregisteredinaccordancewiththeprovisionsofcompanies act2013andRBIAct.1934i.e • AnNBFCcompanycanalteritsobjectclausebywayofaddition, deletion,modification,substitutionorinanywaysubjecttoRBI Approval

  6. PROCEDUREOFCHANGEOFOBJECTCLAUSE PROCEDUREOFCHANGEOFOBJECTCLAUSE 1. CallingofBoardMeetingtodiscussthenewbusinessactivity, shareholderapprovalforthenewbusinessactivityoftheNBFC 2. TheNewbusinessactivitymustbeinaccordancewiththeRBIAct. 1934andthenewbusinessactivitymayrequirehighernetowned fundforthecompany 3. Members’approvalmustbeobtainedbeforeandafterRBIapproval 4. RBIMayrejectthenewbusinessactivityifitisnotinthe complianceofRBIlaws/guidelines. 5. AfterRBIApprovaltherespectiveRegistrarofcompaniesshalltake effectofthechangeintheobjectclauseofNBFC

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