• Society, Association, Trust, NGO & Non- Profit Company

  • Legal provisions of law governing the affairs of the NGOs of all kind, namely, Societies, Trusts, and Non-profit Companies are contained in the Societies Registration Act 1860, and in the The Indian Companies Act 1956. To understand the entire gamut of the NGO societies, the study of the co-operative societies, formed under the Multi-State Cooperative Societies Act, 1984, etc. will also be relevant, as the two are always confused and mixed up for each other. Basic difference amongst an NGO society, trust & non-profit company is as follows:

    Society

    A Society is formed vide a Memorandum of Association which contains Articles of Association with rules & regulations.  Its formation is very easy. The Registrar Of Society commands the jurisdiction in regard to the Society related matters. The Societies Registration Act 1860 governs the affairs of a Society. The object of a Society could be any- literary, charitable, social, etc.  The objects of a Society can be amended by resorting to prescribed legal procedures. Such legal procedure is not very complicated. For formation of a Society minimum people required is only two (7) and there is no limit to the maximum number of people en-board a Society. A Society is registered with the Registrar of societies. In case of a society, no stamp paper is required for Memorandum of association, and rules & regulations. One can choose the name of the Society on its own. No prior approval of the competent authority is required. The management of the Society comprises of its Members only and is called as “Governing Body”, and succession in governing body takes place by way of an election. Annual Meetings of the Society, as also that of the governing body take place as per the rules of Society. The legal status of a Society is limited and it is subjected to very nominal regulations. Membership transfer is not allowed, however a new member can be admitted subject to the rules of the society. Dissolution of a society and/ or its takeover by the government is also possible.  

    Trust

    A Trust is formed vide a Trust Deed - which contains objects of the trust (bye-law).  Its formation is very easy. The Deputy Registrar / Charity Commisioner commands the jurisdiction in regard to the trust related matters. Different states have different laws governing the affairs of a trust. The object of a trust always is social benefits & Charitable. The objects of a trust can be amended by its founders only. Alteration can be undertaken only by the Founder or settlers. If the founder deceased alteration of objects is impossible. For formation of a trust minimum people required is only two (2) and there is no limit to the maximum number of people en-board a trust. A Trust is registered with the Registrar. The stamp duty to be levied is 4% of Trust property. Value is got to be executed in non judicial stamp paper with the registrar. One can choose the name of the trust on its own. No prior approval of the competent authority is required. The management of the Trust comprises of its members only and is called as “Trustees” and succession in Trustees takes place by way of an election. There is no hard and fast provision for the meetings of the management of a Trust. The legal status of a Trust is limited and it is subjected to very nominal regulations. Membership transfer or admission of a new member is almost impossible, however, its dissolution and/ or take over by the government is possible.  

    Non-Profit Company

    A Non-Profit Company is formed vide a Memorandum of Association which contains Articles of Association with rules & regulations.  Its formation is however a little hard. The Registrar Of Company commands the jurisdiction in regard to the Non-Profit Company related matters. The Indian Companies Act 1956 governs the affairs of a Non-Profit Company. The object of a Non-Profit Company got to be non-profit.  The objects of a Non-Profit Company can be amended by resorting to prescribed legal procedures. Such legal procedure is however very complicated. For formation of a Non-Profit Company minimum people required is only two (7) and there is no limit to the maximum number of people en-board a Non-Profit Company. A Non-Profit Company is registered with the Registrar Of Companies under S-25 of the Indian Companies Act 1956. In case of a Non-Profit Company, no stamp paper is required for Memorandum of association, and rules & regulations. One cannot choose the name of the Non-Profit Company on its own, for which a prior approval of the competent authority is required. The management of the Non-Profit Company comprises of its Members only and is called as “Board Of Directors” & “Management Committe”, and succession in governing body takes place by way of an appointment and not an election. Annual Meetings of the Non-Profit Company, as also that of the board of directors/ management committee take place as per the provisions of the Indian Companies Act 1956. The legal status of a Non-Profit Company is maturable and exhaustive. Membership in case of a non-profit company is transferable subject to the provisions of the Indian Companies Act 1956. New member can also be admitted by general body or Board Control on desire through issue of Capital. Dissolution of a Non-Profit Company and/ or its takeover by the government is however very risky and difficult.

    NGO [Non Government Organisation]

    • Administration of a trust: The trustees of a trust are entitled to a wide discretion in the administration of a trust. A disagreement with the exercise of the discretion (however passionate the disagreement might be) does not necessarily lead to a 15 Page 16 conclusion of maladministration, unless the exercise of discretion is perverse.
    • Appointment of trustee
    • Formation of NGO
    • Grants
    • Removal of trustee  
    • Settling a Scheme 
    • Tax Exemptions
    • Fundraising: Types of Fundraising
    • Project: NGO
    • Accounting: NGO 
    • Loan: NGO 
    • Notifications: NGO

    Associations

     

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