Micro Finance/Micro Credit as an object in the Object Clause of Memorandum of Association (MoA) of Section 8 companies registered under the Companies Act, 2013-Clarification - Companies Law - 05/2022

General Circular No. 05/2022 File No. Policy-02/02/2022-CL-MCA Government of India Ministry of Corporate Affairs 5th Floor, 'A' Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi-I Dated:-30.05.2022 To The DGCoA, All Regional Directors, All Registrar of Companies, ROC, CRC, Manesar Subject: Micro Finance/Micro Credit as an object in the Object Clause of Memorandum of Association (MoA) of Section 8 companies registered under the Companies Act, 2013-Clarification-reg. Sir/ Madam, It has been observed that various section 8 companies are altering their object clause for carrying out micro finance activities by way of passing Special Resolution, changing Activity code and subsequently filing of e-form MGT-14 with the concerned ROCs, even though at initial incorporation, the ROC (CRC) is not allowing Section 8 companies to get incorporated with the objects of microfinance activities in view of Ministry's direction letter no. No. 05/33/ 2017-CL.V dated 10.02.2020 and letter dated 31.8.2020. Copy of the letters are attached with this circular for ready reference. 2. Immediate action on the part of RoCs is required as per law, including changing their objects to prevent such companies from carrying out the micro finance activities. 3. The Office of DGCoA shall ensure strict compliance by all the ROCs of the instructions contained in the letters issued earlier by the Ministry on this subject. Further, the ROCs shall also circulate these directions to all the officers/ officials to ensure due examination in accordance with law, while processing e-forms relating to Incorporation of Companies and Change in Objects. 4. This issues with the approval of the Secretary, Corporate Affairs. Encl.: As above. Yours faithfully, (KMS Narayanan) Deputy Director Tel.: 011-2338-7263 F. No. 05/33/2017-CL-V Government of India Ministry of Corporate Affairs 5th Floor, 'A' Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi-I Dated: 10.02.2020 To: Shri S. P. Kumar ROC, CRC, 5th floor, Indian institute of Corporate Affairs, Plot No. 6,7,8, Sector 5, IMT Manesar, Gurugram, Haryana 122050 Sir, Sub: - Application for registration of Micro-Finance Company under Section 8 of the CA, 2013 -reg. The undersigned is directed to refer to letter no. CRC/Sec. 8/2017/666 dated 30.12.2019 on the captioned subject and directed to convey that incorporation of Micro-finance companies wider Section 8 of the Act is not feasible as they do not comply with any stringent criterion of Net owned fund as laid down in the RBI's Non-Banking Financial Company -Micro Finance Institutions (Reserve Bank) Directions of 2011 and therefore, it has been decided with the approval of the competent Authority not to allow name or incorporation of Section 8 containing words Micro-finance . 2. This issues with the approval of Secretary, MCA. Yours faithfully, (KMS Narayanan) Deputy Director Tel.: 011-2338-7263 F. No. 05/33/2017-CL-V Government of India Ministry of Corporate Affairs 5th Floor, 'A' Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi-I Dated: 31.08.2020 To: All ROCs. All RDs. Sir, Sub: - Micro Finance/Micro Credit objects in main objectives of the Section 8 companies -reg. The undersigned is directed to refer to letter no. ROC(CRC)/Technical/2020/ 121 dated 29.07.2020 (copy enclosed) on the captioned subject and directed to convey that this Ministry has already issued directions to CRC vide letter dated 10.02.2020 (copy enclosed) for not allowing incorporation of Micro-finance companies under Section 8 of the Act as they do not comply with any stringent criterion of Net owned fund (NOF) as laid down in the RBI's Non-Banking Financial Company -Micro Finance Institutions (Reserve Bank) Directions of 2011. However, it is now seen that a practice is being followed wherein companies are being incorporated without including micro-finance activities in main objects and later main objects of the company are being amended by inclusion of micro-finance activities by altering MOA. Therefore, ROCs are hereby directed not to allow any such alteration in the main objects by Section 8 companies for inclusion of micro finance/credit activities in main objects of the company, unless requirements of such NOF and other requirements as laid down by RBI Directions are complied. Similar checks should be done for other types of companies too which seek to include Micro-finance in their objects in the MOA. 2. This issues with the approval of Joint Secretary, MCA. Yours faithfully, (KMS Narayanan) Deputy Director Tel.: 011-2338-7263