Formation of NPO By CA Ved Mittal Ved

Formation of NPO By CA Ved Mittal Ved & Associates

Formation of A NPO Trust Society Section 8 Company ( Section 8 of New Company Act 2013 ) Special Licenses.

Relavent Acts The Following Laws or constitutional Articles of Republics of India are relevant to the NPO ◦ Article 19(1) ( c ) and 30 of the constitution of India ◦ Income tax Act 1961 ◦ Public Trust Act of Various States and Indian Trust Act 1882. ◦ Society Registration Act 1860. ◦ Section 8 of Indian companies Act 2013 ◦ Foreign Contribution Regulation Act 2010

Registration of Trust There are Two Types of Trust ◦ Public Charitable/Religious Trust. ◦ Private Family Trust (AOP).

Registration of Trust The Registration for a Trust , whether in relation to a movable property or an immovable property is optional but always desirable. A Registered Trust Deed has certain advantages which are listed below ◦ A registered Trust Deed is an official document which carries support and force of Law ◦ It effectuates transmutation of Possession ◦ A Conveyance of Trust proper to trustee under a Registered Deed is generally not open to Challenge.

Registation of Trust These trust are registered under the Sub. Registrar as per the area of the registered office of the trust. Requirements: (i) Settler: - Who creates the trust. (ii) Trustee: - Who look after the trust. Minimum 2 (iii) Initial Corpus Fund / Trust Property.

Registration of The Trust The Following mentioned Papers need to be submitted at the Office of Sub- Registrar Two copy of the Trust deed with duly signed and photo of settler and trustees Address proof of the registered office with NOC Address proof of Settler and Trustees A Pay order of Rs. 1100/= Two witness All other procedure as same as you purchased the property and transfer

Key Points of Trust Deed Key points to be remembered: ◦ ◦ ◦ Name of the Trust. Name of the Settler. Name of the Trustees. Initial Corpus Fund. Main Objective of the Trust. Ancillary Objective. General Body. Executive Committee. Quorum. Operating Bank Account. Dissolution.

How to Register Society Searching the Name of Proposed Society. Two copy of the Bye-Laws with duly signed by all initial Members. Address proof of the registered office with NOC Address proof of all initial Members A Receipt of Rs 50/= All the papers has to be notarized.

Bye- Laws of the Society Key point to be remembered ◦ Name of the Society. ◦ Work Scope within state or Whole of India. ◦ Main Objective. ◦ Ancillary Objective. ◦ General Body. ◦ Executive Committee. ◦ Quorum. ◦ Operating Bank Account. ◦ Dissolution Clause.

COMPANY U/S 8 Registration Procedure: (i) Availability of name : - in form no INC-1 applies with the ROC as normal name application for companies. (ii) Application for License : - After approved name we file application for License in form no INC-12 with the following documents. 1. Draft Memorandum of Association as per form INC -13. 2. Draft Article of Association

ii. Application for License ( continued ): 3. Declaration in form No INC-14 ( Professional Declaration ). 4. Declaration in form No INC-15 ( Directors Declaration ). 5. Estimated income & Expenditure for next 3 years 6. Approval/ concurrence/ NOC of the concerned Authorities 7. Copy of Resolution Passed in General Meeting and Board Meeting. 8. Assets & Liabilities Statements with their values as per applicable Rule. 9. List of Proposed Promoters. 10. List of Proposed Directors. 11. List of key managerial personnel.

Registration Procedure ( contin…. . ) (iii) After Receiving License we file following form Form Heading Companies Act 1956 2013 Application for Form – 1 incorporation of the company ( other than OPC ) Form – INC-7 Notice of Form- 18 Situation or change of situation of Registered office Form-INC-22 Particulars of appointment of Directors Form- DIR-12 Form-32

Comparison Differential factors Basic Document Trust Society Memorandum of Association Trust Deed - which Articles of contains objects of Association with rules the trust (bye-law) & regulations. Formation Very Easy Jurisdiction Deputy Registrar / Charity Commissioner Easy Registrar of Societies - For Maharashtra Charity Commissioner Company ( Sec 8 ) Memorandum of Association Articles of Association Little Hard Registrar of Companies Relavent state Trust Act - Bompany Public Societies Registration Indian Companies Act Legislation / Statute Trust Act 1950 Act 1860 2013 Objects Social benefits & Charitable Social Benefits & Charitable Nonprofit Activities Authority For Registration Sub- Registrar of Societies Registrar of Society Registrar of Company

Differential factors . Trust Society Can be done by Trustees but Re-ammendment Procedure u/s 92 by Members in or of code of civil governing body procedure be Modification of meeting with Objects required Special Resolution Minimum = 2 Minimum = 7 Maximum = No Required Members limit As Society with Society Registrar Both as a society and a trust in some As Trust with the states like Registration Registrar. Maharastra. As per the Stamp duty Act of relevant State of Trust property No stamp paper Value will be required for executed in non Memorandum of judicial stamp association, and paper with the rules and Stamp Duty registrar regulations. Name Very easy to choose Company ( Sec 8) Complicated Legal Procedures Minimum = 2 /3 Maximum = No limit As per Companies Act under Section 8 No Stamp paper required for Memorandum of association and articles of association. Prior approval required from Registrar of Companies.

Differential factors . Management Board Voting Rights Succession in Management Meetings Membership Transfer Trust Society Trustees Governing Body Board of Directors & Management committee Equal rights to all Trustee Equal Rights to all Members Depand on share Holding By Appointment By Election By Appointment General Body or Board Control through issue of Capital. As Per Companies Act 2013 Board of Trustee Meeting By Nomination Annual Meeting As per Law. Governing Body meeting as per Shareholder / Directors the rules of Society. Meeting Transfer as per Companies Act. By Nomination Member Admission Dissolution or Take over by State Possible Governing Body Control Possible Compliance Filling the Suit by outsider Low Medium In the name of Governing Body Annual Audited Accounts and List of Governing Body In the name of Trustee Annual documents to Be filed No Such Requirement Company ( Sec 8 ) High In the name of Company Annual Return and audited Accounts