How to Amend the MOA of a Section 8 Company – Is Prior ROC Approval Needed?
Brief: A Section 8 company cannot alter its Memorandum of Association (MOA) or Articles of Association (AOA) without previous approval under Section 8(4)(i) of the Companies Act, 2013. This requirement covers the provisions of both documents, not merely the objects clause. For an alteration unconnected with conversion into another kind of company, the approval power has been delegated to the Registrar of Companies (ROC); the application is made in e-Form GNL-1. The company must also obtain the members’ resolution required for the particular alteration and complete the applicable ROC filings. Because “previous approval” may raise a question about the timing of the members’ resolution, the prudent sequence is to obtain ROC approval before passing the resolution. This article explains that sequence, the filing deadlines, the conditional 14-day meeting-notice relaxation and the consequences of default.
- Short Answer
- Applicable Legal Provisions
- Relevant Extracts
- Legal Position
- Approval covers both constitutional documents
- Approval, members’ decision and registration serve different purposes
- Who grants the approval?
- When should members pass the resolution?
- Exemptions and Relaxations
- Practical Procedure
- Consequences of default
- Example
- Conclusion
- FAQs
- Q1. Is approval needed to correct a typing error in the AOA?
- Q2. Can members pass a resolution before ROC approval if it is conditional on approval?
Short Answer
A Section 8 company cannot alter any provision of its MOA or AOA without the previous approval required by Section 8(4)(i). For a change that is not part of a conversion into another kind of company, the ROC exercises the delegated approval power. The company should apply in e-Form GNL-1, obtain approval, pass the requisite members’ resolution and make the applicable filings, including Form MGT-14 for a special resolution. An unauthorised alteration can expose the company and its officers to action under Section 8.
Applicable Legal Provisions
- Section 8(4)(i): A company registered under Section 8 cannot alter the provisions of its MOA or AOA except with the previous approval of the Central Government.
- Section 2(3): “Alter” includes additions, omissions and substitutions.
- Section 13: Governs alteration of the MOA. Section 13(1) generally requires a special resolution; Section 13(6)(a) requires filing of the special resolution; Section 13(9) addresses registration of an alteration of objects; and Section 13(10) provides that an alteration under that section has no effect until registered.
- Section 14: Governs alteration of the AOA by special resolution. Under Section 14(2), the alteration and a printed copy of the altered articles must be filed with the ROC within 15 days.
- Sections 101, 102, 114(2) and 117: Govern meeting notice, the explanatory statement, the voting threshold for a special resolution and filing of the resolution. A special resolution is ordinarily filed in Form MGT-14 within 30 days.
- Notification S.O. 1353(E), dated 21 May 2014: Delegates the approval power under Section 8(4)(i) to the ROC for alterations other than those arising from conversion into another kind of company. The delegated authority for the latter category is the Regional Director.
- Sections 8(6) and 8(11): Address revocation of the licence in specified circumstances and punishment for default under Section 8.
- Notification G.S.R. 466(E), dated 5 June 2015, as amended: Modifies certain provisions applicable to eligible Section 8 companies, including the notice period under Section 101(1).
Relevant Extracts
- Section 8(4)(i): A company registered under Section 8 shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.
- Section 2(3): “Alter” includes making additions, omissions and substitutions.
Legal Position
Approval covers both constitutional documents
Section 8(4)(i) refers to “the provisions of its memorandum or articles”. Its wording is not confined to a change in objects. A proposed amendment to either document should therefore be examined for the prior-approval requirement, whether it concerns objects, governance or another provision. A clerical correction that substitutes or omits wording should also be placed before the approving authority.
Approval, members’ decision and registration serve different purposes
The approval under Section 8(4)(i) addresses the restriction attached to a Section 8 company. It does not replace the members’ resolution required under the applicable provision of the Act. The company must then make the relevant filings; an MOA alteration governed by Section 13 does not take effect until registered under Section 13(10). The approval and filing requirements should be checked separately for a change of name, registered office, capital or company status, as additional provisions may apply.
Who grants the approval?
For an alteration unrelated to conversion into another kind of company, the ROC exercises the delegated Central Government power. The published guidance directs Section 8 companies seeking approval for an MOA change to use Form GNL-1 instead of Form RD-1. If the alteration forms part of a conversion into another kind of company, the conversion procedure and the Regional Director’s jurisdiction must be followed.
When should members pass the resolution?
Section 8(4)(i) requires previous approval. One possible reading is that a resolution expressly conditional on approval does not itself put an alteration into effect. Another is that passing the resolution before approval fails to respect the statutory sequence. In the absence of a settled ruling identified on this timing point, the prudent course is to obtain the approval first and then pass the members’ resolution. The company should not describe the alternative reading as definitively unlawful without authority.
Exemptions and Relaxations
There is no general exemption from Section 8(4)(i) for minor amendments. Under G.S.R. 466(E), as amended, the reference to 21 days in Section 101(1) is replaced by 14 days for a qualifying Section 8 company. The relaxation is subject to the notification’s filing-compliance condition concerning financial statements under Section 137 and annual returns under Section 92. Check that condition before issuing the meeting notice. The statutory rules for consent to a meeting on shorter notice must be considered separately where applicable.
Practical Procedure
| Step | Action | Document or deadline |
|---|---|---|
| 1 | Approve the proposed wording and reasons at a Board meeting; authorise the application. | Board resolution and draft amended MOA/AOA |
| 2 | Apply to the ROC for previous approval, providing the proposed changes and supporting documents. | e-Form GNL-1, for an alteration within the ROC’s delegated jurisdiction |
| 3 | After approval, issue the general-meeting notice with an explanatory statement setting out the change and its reasons. | Apply the eligible 14-day notice relaxation, or the ordinary notice requirement, as appropriate |
| 4 | Pass the resolution required by the relevant alteration provision and record the approval obtained. | Generally a special resolution for alterations under Sections 13 and 14; check any specific provision that governs the proposed change |
| 5 | File the resolution and amended documents; ensure registration where required. | Form MGT-14 within 30 days for a special resolution; comply with the separate 15-day requirement in Section 14(2) for an AOA alteration |
| 6 | After the alteration becomes effective, update affected registrations and records. | Review income-tax, FCRA, bank, CSR and donor records where relevant |
Include all proposed changes in the approval application and compare the members’ resolution and final filed documents with the wording approved by the ROC. If the proposed wording changes materially after approval, seek guidance or fresh approval before proceeding. Review the company’s licence conditions as well as the Act.
Consequences of default
Under the amended Section 8(11), a company that defaults in complying with Section 8 is punishable with a fine of ₹10 lakh to ₹1 crore. Directors and every officer in default are punishable with a fine of ₹25,000 to ₹25 lakh. The earlier reference to imprisonment for this default was removed by the Companies (Amendment) Act, 2020. Where fraudulent conduct is proved, the proviso refers to action under Section 447. Revocation of the Section 8 licence under Section 8(6) is a separate possible consequence in the circumstances specified there; it is not automatic upon every procedural default.
Example
Shiksha Sahyog Foundation, a Section 8 company, proposes to add “skill development” to its objects and amend a quorum provision in its AOA. Its Board approves the draft changes and the company applies for previous approval. After receiving approval, it calls a general meeting on the applicable notice, passes the required special resolution and files the resolution and altered documents within the relevant deadlines. The company should also confirm that the proposed quorum provision complies with the Act and its applicable exemptions before adopting it.
Conclusion
Before amending a Section 8 company’s MOA or AOA, identify every proposed change and obtain the approval required by Section 8(4)(i) from the competent authority. For an ordinary alteration within the ROC’s delegated jurisdiction, the prudent sequence is Board approval → GNL-1 application → ROC approval → members’ resolution → statutory filings and registration. Check any additional procedure triggered by the particular clause being amended.
FAQs
Q1. Is approval needed to correct a typing error in the AOA?
Section 2(3) includes substitutions and omissions within “alter”. The prudent approach is to disclose the correction in the approval application, even if it does not change the intended substance of the clause.
Q2. Can members pass a resolution before ROC approval if it is conditional on approval?
The effect of a conditional resolution in this setting is not treated here as judicially settled. Because Section 8(4)(i) requires previous approval, the safer procedure is to obtain that approval before passing the resolution.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES, Company Secretary in Practice, Delhi. Email: [email protected].
