These organizations normally help ones who are not its members. They can also be deemed as non profit making as they are not permitted to provide their members any form of financial benefits.
How to start a trust
A public charitable trust can be started in India when there is involvement of a certain type of property such as a building or land. These organizations can normally be opened as per the specific Trust Act applicable in the state where the trust will be based. If a state or union territory does not have a Trust Act then the basic ideals embodied in the Trust Act 1882 can be used for the purpose.
The trust deed is the most important component of a public charitable trust and it should contain the aims and various management modes of the same. The trustee deed also specifies the maximum and minimum number of trustees and how they can be employed or removed from their offices.
The trust deed has to be signed by the trustees and settlers in front of a couple of witnesses and it has to be created on non-judicial stamp paper. The worth of this paper will be determined on the basis of the valuation of the said property. There are normally a minimum of two trustees in a trust and they make up the Board of Management.
The people looking to set up the trust need to apply for registration to the official who holds jurisdiction in the region where the trust will be registered. The application form should contain the following details:
- Names of trustees
- Registration fee (this varies from INR 3 to INR 25, based on the worth of the trust property)
- Court fee stamp worth 2 rupees
- Information on modes of succession
- Consent letter
The applicant will then sign the application form before the superintendent of the regional office of the charity commissioner, the regional officer, or a notary. The form consequently needs to be submitted with a copy of the deed.
How to start a society
The Section 20 of Societies Registration Act 1860 states that the below mentioned societies can be registered as per the Act:
- charitable societies
- libraries or reading rooms that can be used by the general public
- military orphan funds or societies which have been set up at various presidencies in India
- public museums and galleries of paintings and other works of art, collection of natural history, inventions, designs, and instruments
- societies established for the promotion of science, fine arts, and literature
In general, the societies operating in India function under the Societies Registration Act 1860. However, in some states there are charity commissioners. In these states the Bombay Public Trusts Act also needs to be followed in order to register the society.
In case of the societies the main instruments are the memorandums of association and the rules and regulations that enlist the aims of the society and the way it is going to be managed.
There should be at least 7 members in the managing committee of a society. The managing committee could operate as a governing or executive body or a council. The trustees of a society need to appeal to either the Registrar of Societies, at the state level, or Registrar of Societies’ local office or District Magistrate, at the district level.
Even though the processes of application differ from one state to another, the forms should be submitted with the duplicates of the following and the applicable registration fee:
- Memorandum of association and rules and regulations. This need not be put on a stamp paper
- Affidavit by the society secretary or president on a non judicial stamp paper worth 20 rupees
- Consent letters from every managing committee member
- A declaration from the managing committee members that the society funds will only be used for executing its aims and purposes
- Authority letter that has been signed by managing committee members
How to start a Section 25 company
The Indian Companies Act 1956’s Sections 25 (1)(a) and (b) state that a Section 25 company can be set up for the promotion of critical domains such as commerce, religion, art, charity, and science. The company thus formed will also be required to use its income and profits for the promotion and the members will not be paid any dividend.
The main instrument in this case is a memorandum and the articles of association. No stamp papers are needed in this case. It should have at least 3 trustees. Its Board of Management operates as a managing committee or board of directors.
The following factors need to be kept in mind while making the application for registering the company:
- The application needs to be made for making a name available to the registrar of companies. It should be done in form no. 1A, which should be submitted along with 500 rupees. If the first name suggested is not accepted the applicant should have 3 other names ready in the same application
- Once a name is confirmed, a written application should be furnished to the Company Law Board’s Regional Director. The application needs to be provided with the following documents:
- a) 3 typewritten or printed copies of the articles of association and memorandum of the prospective company. These should be properly signed by the promoters with their complete name, occupation and address details
- b) A declaration by a chartered accountant or an advocate that the articles of association and the memorandum have been created in accordance with the Act’s rules and requirements concerning matters such as registration
- c) Three copies of a list that has the promoters’ names, work details, and addresses. If the promoter is a firm, then these details of every partner should be provided. Similar details of the prospective board of directors, promoters, and partners have to be provided.
- d) A statement of total assets, along with the approximate worth, and debts owed by the association as applicable on the date of association or 7 days after the same
- e) A statement of expected yearly earnings and expenses of the company-to-be. The sources of income and areas of expenses need to be specified as well.
- f) A statement that provides a short description of the previous accomplishments of the promoters and the work they aim to do following registration as per Section 25
- g) A statement on the reasons for making the application
- h) A declaration by every applicant stating their perfect mental health, absence of criminal records and court cases and suitability as a director as per Companies Act 1956’s Section 203
- The applicants need to provide to the registrar of companies, copies of their application and documents that have been provided to the Company Law Board’s Regional Director
- Within 7 days of filing the application with the Company Law Board’s Regional Director the applicants are also required to issue at least one notice in the leading English or vernacular daily of the region where the NGO will be registered. This needs to be done as per the prescribed manner.
- The regional director can take the decision on providing the license after consultation with concerned authorities, ministry, and departments regarding the objections that may be raised within a period of 30 days of publishing the newspaper notice
Last Updated on 23 March 2012