Herald firm calls meeting to become a non-profit, Sonia Gandhi, Rahul Gandhi in court today

Among other things, the notice, issued by AJL Managing Director Motilal Vora (one of the seven summoned by the Delhi court), proposes to seek the approval of 762 shareholders for turning AJL into a Section 8 company under the Companies Act, 2013.

A Section 8 company is a venture established “for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object” and profits from such a company’s activities, as well as any other income earned by it, can be used only for promoting the objectives of the company. Shareholders of such a company are not entitled to receive any dividend.

The shareholders will also be called upon to change the name of the company from AJL to a new name.

Stating that the board of the company has been considering for “more than four years that the company should not be commercially motivated with a view to distribute any benefits or dividends to its members”, the notice said the company should instead “operate and undertake its activities for the larger public good”.

“As such, the Board has decided to take necessary steps to convert the company into a not-for-profit Section 8 company under the Companies Act, 2013. To effectuate this object and purpose, notice is hereby given that an Extraordinary General Meeting of Members of The Associated Journal Limited will be held on Thursday, 21st January, 2016,” the notice stated.

It also informed shareholders that the EGM will decide to alter the Memorandum of Association as well as Articles of Association of the company for the purpose. Another important agenda item, as per the notice, will be “dealing with preference shares”.

The AJL and its office bearers are in the eye of a political and legal storm ever since it transpired that Vora along with other directors in the company had in December 2010 transferred its entire equity to a new company Young Indian Limited (YIL), in which Sonia and Rahul Gandhi hold majority stake. Other office-bearers are either party leaders like Vora, Oscar Fernandes or Gandhi family loyalists like Sam Pitroda and Suman Dubey.

The YIL is also a non-profit company though under Section 25 of the Companies Act, 1956, it also has to ensure that its profits and all other incomes are utilised only for the purpose of promoting its objects and not for any other purpose. In such a company too, profits can’t be distributed as dividend among its members.

“Basically, Section 8 of Companies Act, 2013 and Section 25 of Companies Act, 1956 are the same. Since YIL was registered before the new Companies Act came into force, it is under Section 25,” a legal expert said, adding that the decision could also be aimed at establishing the bonafide of the move to transfer equity of AJL to YIL.