REGISTRATION OF SOCIETIES / TRUST
DEFINITION OF NGOs
“NGO may be defined as association having a definite cultural, Educational, Economical, Religious or social association organization. They are not owned by any one and cannot distribute its profit/surplus as such. Whatever, Profit/surplus they may earn from economic activities are reinvested or spent on appropriate non profit activities. The typical sources of revenue or non government organizations are donations, Grant, Gift, Membership fee and interest on investment”. Now a days, The word NGO denotes to registered trust, Societies, Cooperative societies, Endowments, Non profit companies, etc. Working for the welfare, Development and progress of people and in a way supplement similar functions of the state and hence, Called as Non Government Organizations (NGOs).
WHAT IS TRUST?
The public charitable trust is a possible form of not-for-profit entity in India. Typically, Public charitable trusts can be established for various purposes, Including the relief of poverty, Education, Medical relief, Provision of facilities for recreation and any other object of general public utility. Public Trusts are generally irrevocable.
Typically, A public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption. In the metro city of India, Trust can be registered in the office of Sub-Registrar
WHAT IS SOCIETY ?
Societies are membership organizations that may be registered for charitable purposes. Societies are similar in character to trusts, Although there a few essential differences. While only two individuals are required to form a trust, A minimum of seven individuals are required to form a society. The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status.
Societies are usually managed by a governing council or a managing committee. In general, Indian citizens serve as members of the managing committee or governing council of societies, Although there is no prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in this capacity. Societies are governed by the Societies Registration Act 1860, Which has been adapted by various states. Unlike trusts, societies may be dissolved.
3. SEC 8 OF COMPANY UNDER COMPANIES ACT 2013 ERSTWHILE SECTION 25 COMPANY UNDER COMPANIES ACT, 1956
Companies which principally governs for-profit entities, Permits certain companies to obtain not-for-profit status as "section 8 companies as per Companies Act 2013”.
Any person or an association of persons intending to be registered as a limited company for charitable purpose can apply for registration of Section 8 company. However, It shall prove to the satisfaction of the Registrar of Companies that:
(a) Its objects includes promotion of commerce, Art, Science, Sports, Education, Research, Social welfare, Religion, Charity, Protection of environment or any such other object
(b) The company on incorporation intends to apply its profits/surplus, If any or other income in promoting such object and
(c) The company prohibit the payment of dividend to its members.
The Registrar on being satisfied after having objection from public at large or any other authorities and regulatory bodies at its discretion, May grant the licence to the Company and such licence may contain conditions as may be deemed necessary by the Registrar. The Registrar may direct the company to insert in its memorandum, or in its articles, or partly in one and partly in the other, Such conditions of the license as may be specified by the Registrar in this behalf.
The Section 8 Company shall enjoy all the privileges and be subject to all the obligations of limited companies. A firm can be a member of a section 8 company.
To alter the provisions of its memorandum or articles of association, Section 8 company will have to obtain the previous approval from the Central Government.
These companies may be formed for "promoting commerce, Art, Science, Religion, charity or any other useful object." These companies must apply its surplus, If any, or any other receipts for the promotion of its objects, and may not pay a dividend to its members. At least three individuals are required to form this type of company. The founders or promoters of this type of company must submit application materials to the Regional Director of the Company Law Board. The application must include copies of the memorandum and articles of association of the proposed company, As well as a number of other documents, Including a statement of assets and a brief description of the work proposed to be done upon registration. The internal governance of a section 25 or Section 8 company is similar to that of a society. It generally has members and is governed by directors or a managing committee or a governing council elected by its members.
Like a society (but unlike a trust), A section 25 or section 8 company may be dissolved. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 25 company, Preferably one having similar objects as the dissolved entity.