Are private limited companies allowed to operate more than one business? We have provided a detailed answer to your question to make your life easier. To fully comprehend the answer, please read the entire article.
The documents that authorize and are necessary for incorporation are known as the Memorandum of Association. A Memorandum of Association describes the purpose of a company in a clear manner. So, now let’s see how can a Pvt Ltd Company carry on multiple businesses.
A company’s articles of association and bylaws provide details about its operations. According to the Indian Companies Act 2013, every Indian company must have a Memorandum of Association.
A company cannot be established without a Memorandum of Association. Under the Companies Act, 2013, each and every MOA must declare the object of the company, as well as the objective of the company (described under section 4).
To put it simply, the “object clause” of the company must appear in the Memorandum of Association, which must be filed with the Ministry of Corporate Affairs (MCA). The object clause refers to the activities of a company that should be pursued by the company and it also defines the scope or outlook of the business.
How Should MOA Be Specified?
Listed below are a few points that help you to give a clear picture of MOA statements.
- The main object of the company I.e. all the activities should be listed on the MOA matters are supported and incidental to the main object.
- A Company should not go beyond with the provided object clause I.e. It’s beyond one’s legal power and will result in void and null.
- The object and MOA of the company is noted and approved during Pvt Ltd Company registration, in order to limit or have a look at the company’s action.
- Under the object clause, a company must provide all the activities that will be carried out after its incorporation, whether it’s related or not is not important.
- Private limited companies can have many activities with the approval of members.
Now when you understand the process and role of MOA, let’s quickly move to the question.
Can a Pvt Ltd Company Carry on Multiple Businesses?
Yes, a company may carry on multiple businesses. All the activities which are not relatable to the company objective are also permitted to take place. How to carry multiple businesses under private limited business.
There are specific ways to carry multiple businesses under one company. Some are listed below.
Multiple subsidiaries concern companies – In this category, you can establish more than one subsidiary company in which the main company can be a Pvt Ltd Company.
You can also establish sister concern companies, where the board of directors might include the board of the primary private limited company Establishing Different Companies under a shared company Name.
Which means to have a common group name of a company. Examples of such companies are Reliance and TATA.
Board directors for the Primary Private Limited Company may or may not be the same as those for the Secondary Private Limited Company. Merger or Amalgamation You could also opt for Amalgamation, Merger, Acquisition and Take over etc.
Essentially, the MOA of a company is what defines what your company can and can’t do. Reach out to the experts at Vakilsearch to ensure your MOA is perfectly drafted.
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