MCA cautions Section 8 companies not to carry out any micro finance activity
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- Last Updated on 2 June, 2022
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General Circular no. 05/2022. Dated: 30.5.2022
The MCA observed that various section 8 companies are altering their object cause for carrying out the business of micro finance activities by way of passing a special resolution, changing activity code and subsequently filing of e-form MGT-14 with the concerned RoCs.
The MCA said that even though at initial incorporation, the RoCs are not allowing Section 8 companies to get incorporated with the objects of microfinance activities in view of Ministry’s direction letter no. 05/33/2017-CL-V dated 10.2.2020 and letter dated 31.08.2020.
The MCA has further directed that the office of the Director-General of Corporate Affairs (DGCoA) shall ensure strict compliance with the instruction by all RoCs. MCA further directed that RoCs shall circulate these directions to all the officers/officials to ensure due examination in accordance with law while processing the e-forms relating to the incorporation of Companies and change in objects.
Earlier, MCA vide direction letter no. No. 05/33/20 dated 10-02-2020 prohibited the inclusion of micro finance activities in the object clause of Section-8 Company unless the Net Owned Fund (NOF) and other requirement as laid down by RBI are complied with. Now, ROCs are immediately directed to prevent such companies from carrying out micro finance activities.
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