Non-Profit organizations (NGOs) are basically not-for-profit organization whose main motive is to support underprivileged section of the society and work for the advancement of different issues whether it is of social, cultural, legal, environmental, art, or science. These kinds of organizations are run and operated by the citizens on voluntary initiatives without any kind of interference from central or state governments.
Why is it necessary to register before establishing a Non-Profit Organisation?
It is necessary to get the registration done before commencing any Non-Profit Organization because it provides a legal entity to the organization which makes it more credible in the eyes of law and contributors. So, it is recommended if you are willing to work with an objective of betterment or advancement for any particular section of the society.
There are basically three legal ways in India for registration:
- Trust registration
- Society registration
- Section 8 company registration
Above three business models are regulated by separate acts there are many distinct features of every model. So, you are free to choose a business model based on their personal requirement and preference, level of operation and scale.
Basic Laws applicable for NGO Registration
It can be done in three forms under their regulating acts in India. Following are these three options:
- Trust Registration under The Indian trusts Act, 1882
- Society registration under Societies Registration Act, 1860
- Section 8 Company Registration under Companies Act, 2013
What is the purpose of Non-Profit Organization?
The basic difference between a non-government organisation and other organisation is the purpose with which it is established. Every organisation is set for profit making as it ensures smooth functioning and future growth. Although, it is done with only one purpose which is to help others. Maybe the sector for which it works differ but the ultimate objective and inherent desire of supporting the under privileged, social welfare is always there and works as a driving force. There are many ways to get this done like education, art, cultural promotion, trade, skill development etc.
At the time of commencing a non-profit organisation one must clearly define a clear vision for which it is established and will be operated. Besides, they must also define the beneficiary which can either be public in general or a set of people.
Procedure of NGO Registration
Under the Indian Trust Act following are the minimum requirement as a Trust in India:
For Charitable Trust
- Select an apt name for your NGO
- Choose the settlor, minimum 2 trustees and a clear definition of who will be the beneficiary.
- Then prepare the MOA and by-laws and execute a proper trust deed containing all the key provisions and clauses.
- Remember, the Trust deed must be executed on stamp paper of sufficient value based on the value of the property assigned to the Trust.
- At last, the Trust deed must be signed by all the trusteed and settlor and registered with the Local Registrar of the area in which registered office of the NGO is located.
- Select an apt name for your NGO.
- Prepare a governing body of the proposed Trust.
- Form a MOA and by-laws of the proposed society including all the rules and regulations for the NGO registration and operation.
- As soon as everything is final, the applicant is required to submit this MOA and rule and regulations document along with the registration forms to the State Registrar of society in which jurisdiction of registration is done.
For Section 8 Company
- Select an apt name for your NGO and please ensure that it does not resemble any already registered company or Limited Liability Partnership formation. Moreover, this proposed name must be filed for reservation through reserve unique name facility available on the MCA portal. The Maximum limit for names that can be filed in one go is 2.
- As soon as the name is approved you are required to prepare the MOA and AOA of the organization along some other required documents like projected profit and loss statement, brief description of work, statement of assests and liabilities etc.
- Once the preparation of all documents done then submit an online application to respective ROC for issue of License in Form INC-12.
- Afterward, license is issued. Now you can file incorporation application in SPICe Form along with the required document as attachments.
- Certificate of Incorporation will be issued after the proper verification of the application. This certificate will contain the company Identification Number (CIN) along with company's PAN & TAN Number.
This article has been contributed by Sarubpreet Kaur who is a content writer with LegalRaasta. Legal Raasta is an online portal that assists companies and startups with Company registration, NBFC Registration, GST registration and ITR filing.