Memorandum of Association and Articles of Association are constitutional documents for companies. No company can amend these constitutional documents except the procedure in Section 13 and Section 14 of the Companies Act 2013.
Section 8 companies, popularly known as Not-for-profit companies, require additional compliance for amending their constitutional documents. Subsection 4(i) of Section 8 mandates prior approval for the alteration of constitutional documents of Section 8 companies.
“A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government”.
The term “alter” or “alteration” includes making additions, omissions and substitutions in the documents.
The Central Government by its Notification S.O. 1353 (E) dated 21 May 2014, delegated its power and functions under Section 8(4)(i) to the Registrar of Companies.
For making such an application before the Registrar of Companies, the board shall pass a resolution proposing the alteration, consent to filing the application, and authorise one or more directors to apply with the Registrar of Companies.
The application shall be filed in Form GNL – 1.
For alteration of Articles of Association, after receiving approval from the Registrar of Companies, the board shall call a general meeting for approval of the alteration. Members may approve the alteration by way of special resolution only.
Every alteration of the articles and a copy of the order of the Government approving the alteration shall be filed with the Registrar, together with a printed copy of the altered articles, within fifteen days who shall register the same. After the approval by shareholders, the company shall file Form MGT-14 with the Registrar of Companies under Section 117 of the Act within fourteen days.
Every alteration made in a company’s articles shall be noted in every copy of the articles. Suppose a Section 8 company amends its articles without prior approval of the Registrar of Companies. In that case, the company shall be punishable with a fine which shall not be less than ten lakh rupees which may be up to one crore rupees. Every Director and every officer of the company who is in default shall be punishable with a fine which shall not be less than twenty-five thousand rupees but may extend to twenty-five lakh rupees.
AishMGhrana 