Rules 21 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A section 8 company that wants to become any other kind of company must follow rules 21 and 22: a special resolution with a detailed explanatory statement, an application to the Regional Director in Form INC-18, a notice in Form INC-19, representations from named authorities, conditions in the Regional Director's order, and a filing with the Registrar in Form INC-20. Rule 23 covers the separate case of a licence that has been revoked.
This article is as amended up to G.S.R. 579(E) dated 26 August 2025 (rule text per the MCA e-book to G.S.R. 411(E) of 16 July 2024; later notifications substitute forms only). Later amendments should be checked. For section 8 work, see our section 8 company registration service.
A section 8 company passes a special resolution with an explanatory statement (rule 21), files Form INC-18 with the Regional Director and publishes Form INC-19 within a week (rule 22). The Regional Director's order can carry conditions: giving up section 8 privileges, paying the difference on concessional immovable property and using accumulated profit for dues first, with the balance to the IEPF within thirty days. After revocation of a licence, the company applies in Form INC-20 (rule 23).
Rule 21: the resolution and the filings
Rule 21(1) and (2): special resolution and explanatory statement
A section 8 company intending to convert into a company of any other kind shall pass a special resolution at a general meeting. The explanatory statement annexed to the notice must set out in detail the reasons for the conversion, including:
- (a) the date of incorporation of the company;
- (b) the principal objects as set out in the memorandum;
- (c) why the activities for achieving the objects cannot be carried on in the current structure as a section 8 company;
- (d) if the principal or main objects are to be altered, the altered objects and the reasons;
- (e) the privileges or concessions the company currently enjoys, such as tax exemptions, approvals for receiving donations or contributions including foreign contributions, and land and other immovable properties acquired at concessional rates or prices or gratuitously, with the market price at acquisition and the price paid, and details of donations or bequests received with conditions attached to their use;
- (f) the impact of the conversion on the members, including benefits that may accrue to them.
Rule 21(3) to (5): filings
A certified true copy of the special resolution, with the notice convening the meeting and the explanatory statement, is filed with the Registrar in Form No. MGT.14 along with the fee (3). An intimation with a copy of the application and annexures as filed in Form INC.18 with the Regional Director also goes to the Registrar through the MCA system (4), and a copy of the application with annexures as filed with the Regional Director is also filed with the Registrar (5). Sub-rule (4) was substituted by the Amendment Rules, 2023 of 19 January 2023; the earlier wording in the notes is not the rule today.
Rule 22: the other conditions
| Sub-rule | Requirement |
|---|---|
| 22(1) | Within a week from submitting the application to the Regional Director, publish a notice at the company's own expense, in Form INC-19, at least once in a vernacular newspaper in the principal vernacular language of the district of the registered office and at least once in an English newspaper, each with wide circulation, and on the company's website, if any, and as notified or directed by the Central Government; send a copy of the published notice forthwith to the Regional Director |
| 22(2) | Send a copy of the notice with the application and attachments, simultaneously with publication, by registered post or hand delivery, to the Chief Commissioner of Income Tax having jurisdiction, the Income Tax Officer with jurisdiction, the Charity Commissioner, the Chief Secretary of the State of the registered office, and any organisation or Department or authority under whose jurisdiction the company has been operating. Any of them wishing to make a representation to the Regional Director shall do so within sixty days of receipt of the notice, after giving the company an opportunity |
| 22(3) | Attach proof of serving the notice to the application |
| 22(4) | Board declaration that no portion of the income or property has been or shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise to persons who are or have been members or those claiming through them |
| 22(5) | Where the company has obtained any special status, privilege, exemption, benefit or grant from an authority such as the Income Tax Department, Charity Commissioner or other body, obtain a No Objection Certificate, if required under its terms, and file it with the application |
| 22(6) | The company should have filed all financial statements and annual returns up to the preceding financial year and all other returns up to the date of the application; if the application is made after three months from the end of the preceding financial year to which statements were filed, a statement of financial position certified by a chartered accountant, made up to a date not earlier than thirty days before filing, is attached |
| 22(7) | File the application with a declaration from a practising chartered accountant, company secretary or cost accountant that the conditions in the Act and rules for conversion have been complied with |
| 22(8) | The Regional Director may require the approval or concurrence of any authority and may obtain a report from the Registrar |
| 22(9) | On being satisfied, the Regional Director issues an order approving the conversion, subject to terms and conditions in each case, including those in (a) to (c) below |
| 22(10) | Before imposing conditions or rejecting the application, the company gets a reasonable opportunity of being heard |
The conditions in the order (rule 22(9))
- (a) the company shall give up, and not claim from the date the conversion takes effect, any special status, exemptions or privileges it enjoyed by being registered under section 8;
- (b) if it acquired any immovable property without payment or at concessional cost from a government or authority, it may be required to pay the difference between the cost and the market price at the time of conversion to that government or authority;
- (c) accumulated profit or unutilised income brought forward from previous years shall first be used to settle statutory dues, amounts due to lenders, claims of creditors, suppliers, service providers and others including employees, and lastly any loans advanced by promoters or members or amounts due to them; the balance, if any, shall be transferred to the Investor Education and Protection Fund within thirty days of receiving the approval.
Rule 22(11) and (12): after the order
On receipt of the Regional Director's approval, the company convenes a general meeting to pass a special resolution amending its memorandum and articles as the Act requires. It then files with the Registrar: a certified copy of the approval within thirty days from the date of receipt of the order, in Form No. INC.20 with the fee; the amended e-Memorandum and e-Articles; and a declaration by the directors that the conditions imposed have been fully complied with. The Registrar then registers the documents and issues a fresh Certificate of Incorporation. Rule 22(12) refers to "sub rule (10)" for the documents; the documents are those listed in sub-rule (11).
Example: Green Path Education Foundation, a section 8 company, passes the special resolution with the six items in the explanatory statement and files MGT.14. It files INC-18 and, within a week, publishes INC-19 and posts the notice to the Income Tax Chief Commissioner, the Charity Commissioner and the others listed. The Regional Director's order requires the company to give up its privileges and use accumulated profit first for dues; the company files INC-20 within thirty days of receiving the order.
Rule 23: revocation of the licence
Where the licence granted to a section 8 company has been revoked, the company shall apply to the Registrar in Form No. INC.20, with the fee, to convert its status and change its name accordingly. The rule prints no period. For the Act's provisions on revocation and its consequences, read our section 8 company guide and the post on section 8 closure, strike-off or winding up; for the tax effects of conversion, see our income-tax guides.
Fees for the filings are not printed in these rules; they are in the Registration Offices and Fees Rules.
Need help converting a section 8 company?
The conversion touches the Regional Director, the Registrar, tax and charity authorities and the members. TaxClue can prepare the resolution, notices and filings; see our section 8 company registration page for the section 8 services we handle.
Key takeaways
- Special resolution with a six-point explanatory statement; MGT.14 to the Registrar.
- INC-18 to the Regional Director; INC-19 notice within a week; copy to the named authorities.
- Authorities may make representations within sixty days of receiving the notice.
- The order may require giving up privileges, paying the difference on concessional property and using accumulated profit for dues.
- After the order, INC-20 within thirty days, with amended e-MoA and e-AoA and directors' declaration.
- Rule 23: INC-20 after revocation of a licence.
Read next
- Rules 19 and 20: the section 8 licence
- Rules 37 and 39: converting unlimited and guarantee companies
- Section 8 company: closure, strike-off or winding up
- Section 8 company: MOA amendment, change of name and objects
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.