A Section 8 Company is a non-profit organization that helps people through charitable work.
It works for causes like education, to help people who are in need, to save the environment or to promote art and culture.
The goals of a Section 8 Company are clearly stated in a part of its document called the Object Clause of the Memorandum of Association.
If this company wants to do things or change what it does it has to change their Object Clause first.
Because, Section 8 companies get special exemptions and only do charitable work, to change their Object Clause is a big deal and has to be done carefully. The rules for changing the object clause are stricter compared to other companies.
What is an Object Clause?
The Object Clause in the Memorandum of Association specifies:
- The purpose for which the company is formed
- The activities it is allowed to carry out
- The scope of operations of the organization
A company must operate only within the limits of its object clause.
Types of Object Clauses in a Company
1. Main Objects
These are the primary activities for which a company is incorporated. A company is formed to do these activities.
Example:
If a company is formed to educate people its main object may be:
To help people learn and to start schools, colleges and training centers.
2. Ancillary or Incidental Objects
These are the activities that help the company to achieve the main objectives. They are necessary to help the company do its main objectives.
Example:
To buy property for schools.
To receive donations or grants.
3. Legal Provisions
The change in object clause of a Section 8 company is governed by:
- Section 8 of the Companies Act 2013
- Section 13 of the Companies Act 2013
- Rule 21 of Companies Incorporation Rules, 2014
These rules say that the companies require prior approval of Central Government, (delegated to Registrar of Companies) before altering Memorandum of Association of a Section 8 company.
Procedure to Change the Object Clause of a Section 8 Company
Step 1: Board Meeting
The Board of Directors must hold a meeting to:
- Approve the proposed change in the object clause
- Approve the draft altered MOA
- Authorize a Director to apply to ROC for approval
Step 2: Application to ROC (Prior Approval)
Before altering the object clause, the company must obtain prior approval from the Central Government (Power delegated to ROC)
The application is generally filed through Form GNL-1 along with supporting documents.
The ROC reviews the application and may ask for clarification if required.
Step 3: Approval from ROC
Once the ROC is satisfied, it grants approval for alteration of the object clause. Only after receiving this approval, the company can proceed with altering the MOA.
Step 4: Convene Extra-Ordinary General Meeting (EGM)
After obtaining ROC approval, the company must convene an EGM and pass a Special Resolution approving the alteration of the object clause.
Step 5: Filing of Special Resolution
The company must file Form MGT-14 with the ROC within 30 days of passing the Special Resolution.
Attachments include:
- Special Resolution
- Altered MOA
- GNL-1 Approval Proof
Step 6: Registration of Alteration
After verification, the ROC registers the alteration in the MOA and updates the company’s records. Unlike name change, no fresh Certificate of Incorporation is issued.
MCA Forms Required
| Form | Purpose |
| GNL-1 | Application to Central Govt seeking prior approval |
| MGT-14 | Filing of Special Resolution |
Documents Required
The following documents are generally required:
- Board Resolution approving the proposed change
- Application letter to ROC
- Draft altered Memorandum of Association
- Existing MOA and AOA
- Justification for change in object clause
- List of directors
- Financial statements of the company
- Special Resolution passed by members
Important Points to Remember
- You need approval from the ROC before you can change the object clause.
- The alteration must remain within charitable purposes allowed for Section 8 companies.
- After getting approval the company must pass a Special Resolution.
- The company must file Form MGT-14 within 30 days.
- A new Certificate of Incorporation is not issued for changing the object clause.
Conclusion
To change the object clause of a Section 8 company you have to follow the procedures very carefully. This is because Section 8 companies work under a license and they get some special benefits.
If a Section 8 company wants to change its objectives and do charitable work it has to get permission, from the Registrar of Companies first. Then it has to pass some resolutions and submit the required forms. This is how a Section 8 company can legally change its objectives and expand its activities.
FAQs
1. Can a Section 8 company change its object clause?
Yes it can, It needs to obtain approval from the Registrar of Companies (ROC) first.
2. Which form does a company use to file with the ROC for approval?
It usually uses Form GNL-1 for this.
3. What kind of resolution is needed to change the object clause of Section 8 Company?
The members must pass a Special Resolution.
4. Which form does a company use to file the Special Resolution?
The company must file Form MGT-14 with the ROC.
5. Does a company get a Certificate of Incorporation after object clause change?
No, the ROC only registers the alteration in the Memorandum of Association.
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