To help you better understand the corporate purpose of a company, you will see in this article what is meant by corporate purpose, what are the rules to follow when drafting it and what are the formalities to follow in case of modification.
What is meant by corporate purpose?
The company’s object is a document in which the activities carried out by a company are set out. Indeed, after its creation, a company must draw up a written document which will mention all the operations it will carry out. The company therefore has no right to carry out activities that have not been indicated in the corporate object. In the event of non-compliance with the rules governing the corporate purpose, are firms subject to sanctions? Of course they are. In general, there are two kinds of punishment. If the tasks that appear in the corporate object of a company are illegal, they are therefore subject to nullity. If, on the other hand, they are badly drafted or if it is not mentioned in the articles of association, they are obliged to regularise it and insert it in their articles of association. But why does a company have to draw up a corporate object? Certainly because it helps to ensure the proper functioning of the establishment. It also makes it possible to define whether it is commercial or civil. And finally, it helps the national institute of statistics and economic studies to assign a specific APE code to a company.
What are the rules to follow when drafting a company’s corporate purpose?
A corporate purpose should not only be drafted with great care, but also with great precision. In order to help you, you will find enclosed a few tips to help you formulate a company object correctly:
– Use clear and precise terms. Use clear and precise terms, so do not make approximate descriptions;
– Plan a long list of activities, you can even mention operations that you do not plan to carry out at the moment;
– It does not have to be universal;
– The projects you are going to mention must be feasible;
– Avoid stating illicit activities in a corporate purpose. That is to say that they must in no case break the law and disturb public order;
– It must not be either too narrow or too broad either, otherwise it could be subject to change and this could result in significant expense.
What about the modification of the corporate object?
The corporate object of a company can be changed at any time. There are many formalities and steps to be taken into consideration:
– First of all, the manager must organize an extraordinary general meeting. During this meeting, all the partners can then approve or not this correction;
– Once this decision has been accepted, the shareholders must then notify it in minutes and publish a legal announcement;
– Then the company must carry out the formalities with the Chamber of Trade;
– And finally, it must also think about declaring this change at the registry office.