Non-Governmental Organization

NGOs in India

An NGO or Non-Governmental Organization is basically a non-profit or not for profit organization which strives to work towards the betterment of the underprivileged sections of Society. NGOs could have a wide variety of interests of society in mind. This could include Environmental causes, human and/or animal rights, improving the health and welfare of children, development work and could even include raising awareness about some causes or activities of social importance.

With all that being stated, sometimes NGOs are also established to act as fronts for political as well as religious interests. However, NGOs being non-profit organizations, these entities are not allowed to shell out the profits to the members as dividends. All profits made by the organization have to be invested towards the social cause the NGO is helping.

NGOs essentially raise the money from donors, who might or might not receive tax breaks on their donations. Essentially in India, there are 3 ways to set up an NGO:

• Trust
• Section-8 Company
• Society

Methods for Registering an NGO in India

NGO registration  in India can be done under any of the following disciplines:

TRUST

One way of registering your Non-governmental organization is by incorporating it as a trust.  Entities who register as a trust under the NGO registration procedure are generally those which work with the eradication of poverty, giving education, as well as providing medical relief. Trust organizations are irrevocable. This essentially means that these organizations cannot be terminated or changes unless and until such actions have been approved by the beneficiary.

Trusts aren’t technically under any national rules and regulations, however, some states such as  Gujarat and Maharashtra have public trust acts in order to regulate and oversee the affairs of NGOs.

 SOCIETIES

Societies are also known as member-based organizations which operate for charitable purposes. These organizations are almost always run under the authority of a governing body or a management committee. As opposed to trusts, societies come under the jurisdiction of the Indian law, namely Societies Registration Act, 1860.

SECTION 8 COMPANIES

A Section 8 company is basically a Limited Liability entity which is formed with the purpose of Social welfare and cannot reap any profits. These organizations are established in order to promote science, art, commerce, charity, religion, or any other contributing cause to the betterment of society.

Laws Governing NGO Registration

The NGO registration procedure in India comes under the jurisdiction of the laws formed under the procedure to register NGO’s in India. The NGO registration procedure in India is regulated as follows:

• Indian Trusts Act, 1882 for Trust Registration
• Societies Registration Act, 1860 for Society Registration
• Companies Act, 2013 for Section 8 Company Registration

Let’s look at the Procedure for the NGO registration one by one for concerned NGO’s.

Trust Registration Process

In order to register a Trust, the organization needs to comply with the Indian Trusts Act of 1882. In accordance with the act, there are a few prerequisites that an organization needs to be ready with in order to form the trust. Here are the prerequisites:

• Name for the Trust
• Registered Address dedicated for the Trust
• Objects/Objectives of the Trust
• One settler of the trust
• 2 Dedicated trustees of the trust
• Property of the Trust (Movable or Immovable)

Once, you have the pre-requisites ready with you, you will need to put together a Trust Deed. In order to do make a trust deed, you will need to furnish the following:

• The deed should be made on a stamp paper of given value
• Passport size photographs and identity proof of Setller
• Passport size photographs and identity proof of the two trustees
• Passport size photographs and identity proof of two witnesses
• Setller’s signature on all pages of the deed

Society Registration Process

The process of NGO registration as a society in India is governed under the regulations of the Societies Registration Act of 1860. The registration/constitution of a Society NGO in India requires two major things

• Memorandum of Association
• Regulations and Rules of the Society

In order to form the Memorandum, you will need to fill out the 5 clauses of the Memorandum of the Society.

• Name Clause
• Domicile Clause
• Objects Clause
• Liability Clause
• Capital Clause
• Subscription Clause

For setting the rules and regulations of the company, your formulation should answer the following important questions:

• How do you become a member and subscribe to society?
• What rules are applicable to society and it’s members?
• How are the meetings organized?
• How is the governing body of the society formed?
• When and how will the auditors of the society be appointed?
• How will legal matters be settled?

Section 8 Company Registration Process

The registration of an NGO under the section 8 company registration procedure is like any other company registration procedure in India. You need directors, their digital signature certificates along with MoA and the AoA (Articles of Association). Below we list down the step by the strp procedure to form a Section-8 Company.

Management Differences between Trust, Society and Section-8 Company

The varying kinds of NGOs that we have to require a variety of administrative styles as their formation is different and hence the management styles for such organizations are different as well. A trust is managed by a group of trustees, a society is managed by a committee or a managing council and on the other, a section-8 company is managed by a board of directors.

Jurisdiction and Law

The governance of trust is under the Registrar of Trusts. This means that all trust deeds need to be registered with this registrar of Trusts. On the other hand, societies are governed by a Registration of Societies hence all administrative and registration purposes work with regards to societies goes through the registrar of Societies. Section 8 Companies are corporate entities which come under the governance of the Registrar of Companies and have to comply with all ROC Compliances set out by the Ministry of Corporate Affairs such companies are subject to an audit every year.

Purposes

Trusts, Societies and Section 8 companies, under the NGO registration procedure, are subject to stricter scrutiny from the authorizing/governing bodies. In general, even though the procedures are streamlined and filing of companies can be done via One Day Company Incorporation. Governing bodies need to be convinced of the authenticity of the intention/ purposes for which the organization has been set up. In accordance with the same, even though formalities might be done beforehand, it takes over 20 days to register a trust, 45 days to incorporate society and up to 75 days to set up a section-8 company.

Forms for NGO Registration

• Form INC 1: Name registration of NGO
• Form INC 12: Form should be submitted to acquire a license to run an NGO
• Form INC 13: Memorandum of Association; INC-15 is a declaration by each subscriber to the Memorandum
• Form INC 7: Application for Incorporation of the NGO.
• FORM INC 22: Details of the Registered Address
• Form DIR 12: To appoint directors of the NGO

Documents for NGO Registration

Here we list down the mandatory documents required for registration of an NGO

• A requesting letter  for registration signed by founding members stating the purpose of formation
• Certified copy of MoA [Memorandum of Association]
• Copy of the rules and regulations members will abide by
• Name, Address, Occupation of all members of society with signatures
• Minutes of meeting
• Declaration by President of Society
• A sworn affidavit from the President or Secretary,  declaring the relationship between subscribers
• Address Proof of Registered office and No-Objection Certificate (NOC) from the landlord