NGO FORMATION AND REGISTRATION

• Formation
• Registration

FORMATION

A Non Governmental Organization is perceived to be an association of persons or a body of individuals.  An association of persons with non-profit motive may be registered under any of the following Indian Acts:

1. As a Charitable Trust
2. As a Society registered under the Societies Registration Act
3. As a Company licensed under section 25 of the Companies Act

Trust

 "Trust" is defined as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another, or of another and the owner. Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.A Trust may be created by any language sufficient to know the intention and no technical words are necessary. A trust deed, generally, incorporates the following:

1. The name(s) of the author(s)/settlor(s) of the trust;
   
2. The name(s) of the trustee(s);
   
3. The name(s) if any, of the beneficiary/ies or whether it shall be the public at large;
   
4. The name by which the trust shall be known;
   
5. The name where its principal and/or other offices shall be situated;
   
6. The property that shall devolve upon the trustee(s) under the trust for the benefit of the beneficiary/ies;
   
7. An intention to divest the trust property upon the trustee(s);
   
8. The objects of the trust;
   
9. The procedure for appointment, removal or replacement of a trustee. Their rights, duties and powers etc;
   
10. The rights and duties of the beneficiary/ies;
    
11. The mode and method of determination of the trust. 

The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.

Trustees : A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees. 

Application for Registration : The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

After providing details (in the form) regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp of Rs.2/- to the form and pay a very nominal registration fee which may range from Rs.3/- to Rs.25/-, depending on the value of the trust property. 

The application form should be signed by the applicant before the regional officer or superintendent of the regional office of the charity commissioner or a notary. The application form should be submitted, together with a copy of the trust deed. 

Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter.

Society

A society may be defined as a company or an association of persons united together by mutual consent to deliberate, determine and act jointly for same common purpose. Minimum seven persons, eligible to enter into a contract, can form society. When an NGO is constituted as a society, it is required to be registered under the Societies Registration Act, 1860, which is a federal act. In certain states, which have a charity commissioner, the society must not only be registered under the Societies Registration Act, but also, additionally, under the Bombay Public Trusts Act. 


The chief advantage of forming a society are that it gives a corporate appearance to the organization, and provides greater flexibility as it is easier to amend the memorandum and bye laws of the society than in case of trust, terms of which are strictly manifested in the trust deed. However, formation of a society requires more procedural formalities than in case of a trust.

For the purpose of registration, following documents are required to be filed with the registrar of Societies:

• Covering letter requesting for registration stating in the body of the letter various documents annexed to it. The letter is to be signed by all the subscribers to the memorandum or by a person duly authorised by all of them to sign on their behalf.
  
• Memorandum of Association, in duplicate neatly typed and pages serially numbered (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined
• Rules and Regulations/Bye-Laws, in duplicate, certified by at least three members of the governing body.
  
• An affidavit of the president/Secretary of the society, on a non-judicial stamp paper of prescribed value, stating the relationship between the subscribers, duly attested by an oath commissioner, notary public or 1st class magistrate.
  
• Documentary proof such as house tax receipt, rent receipt in respect of premises shown as registered office of the society or no objection certificate from the landlord of the premises.
  
• An authority duly signed by all members of the managing committee.
  
• A declaration by the members of the managing committee that the funds of the society shall be used only for the purpose of furthering the aims and objects of the society.

Trustees : A Society needs a minimum of seven managing committee members; there is no upper limit to the number managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee

FORMS

Society registration forms
            FORM No. 1, FORM No . V, VI, VII
Other forms include the bylaws of the society.

Company

Under Section 25 of the company's act, an association formed or to be formed:

• For the purposes of promoting commerce, art, science, religion, charity ot any other useful object
  
• With intention to apply its profits or other income for promoting its objects, and 
  
• Which prohibits payment of any dividend to its members,

Is permitted to be incorporated without addition of the word "Limited" or "Private Limited". Procedure for applying is same as applicable in the case of all companies.

If the registrar is satisfied that all formalities have been complied with, he will issue a certificate of incorporation from which date the company comes into existence.
For a section-25 company, the main instrument is a Memorandum and articles of association (no stamp paper required) 

Trustees : A section-25 Company needs a minimum of three trustees; there is no upper limit to the number of trustees. The Board of Management is in the form of a Board of directors or managing committee. 

Application for Registration : 
1.An application has to be made for availability of name to the registrar of companies, which must be made in the prescribed form no. 1A, together with a fee of Rs.500/-. It is advisable to suggest a choice of three other names by which the company will be called, in case the first name which is proposed is not found acceptable by the registrar. 

2.Once the availability of name is confirmed, an application should be made in writing to the regional director of the company law board. The application should be accompanied by the following documents: 
Three printed or typewritten copies of the memorandum and articles of association of the proposed company, duly signed by all the promoters with full name, address and occupation. 

A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made thereunder have been duly complied with, in respect of registration or matters incidental or supplementary thereto.

Three copies of a list of the names, addresses and occupations of the promoters (and where a firm is a promoter, of each partner in the firm), as well as of the members of the proposed board of directors, together with the names of companies, associations and other institutions in which such promoters, partners and members of the proposed board of directors are directors or hold responsible positions, if any, with description of the positions so held.
A statement showing in detail the assets (with the estimated values thereof) and the liabilities of the association, as on the date of the application or within seven days of that date. 
An estimate of the future annual income and expenditure of the proposed company, specifying the sources of the income and the objects of the expenditure. 

A statement giving a brief description of the work, if any, already done by the association and of the work proposed to be done by it after registration, in pursuance of section-25. 

A statement specifying briefly the grounds on which the application is made. 

A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged insolvent, not convicted by a court for any offence and does not stand disqualified under section 203 of the Companies Act 1956, for appointment as a director. or in its articles, or in both, such conditions of the licence as may be 3.The applicants must also furnish to the registrar of companies (of the state in   which the registered office of the proposed company is to be, or is situate) a copy of the application and each of the other documents that had been filed before the regional director of the company law board. 

4.The applicants should also, within a week from the date of making the application to the regional director of the company law board, publish a notice in the prescribed manner at least once in a newspaper in a principal language of the district in which the registered office of the proposed company is to be situated or is situated and circulating in that district, and at least once in an English newspaper circulating in that district. 

5.The regional director may, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspapers, and after consulting any authority, department or ministry, as he may, in his discretion, decide, determine whether the licence should or should not be granted. 

6.The regional director may also direct the company to insert in its memorandum specified by him in this behalf. 

Source-http://in.answers.yahoo.com/question/index?qid=20080110202311AANzEOy

Click here to view the Companies Act, 1956

Comparison among Trust, Society and Non profit Company

 (Source: Caf India)

REGISTRATION

Head office
O/o The Inspector General of Registration 
No.100, Santhome HighRoad , Chennai 600 028. Ph : 91-44-24640160,
Fax: 91-44-24942774 ; Mail: igregn@tnreginet.net 
http://www.tnreginet.net/

District Level

District Registrar Office,
Collectorate

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