A Detailed Procedure for NGO Registration

In India NGO i.e. Non-Profit Organisations / public charitable organizations i.e. Non-Profit Organisations shall be formed as trusts, societies, or a private limited non-profit company, under section-8 companies. Non-profit organizations in India

(a) Exist independently of the state;

(b) Are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity;

(c) Produce benefits for others, generally outside the membership of the organization; &

(d) Are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.

• Section 2 subsection 15 of the Income Tax Act which is applicable uniformly throughout the Republic of India – defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief & the advancement of any other object of general public utility’.
• A purpose that relates exclusively to religious teaching or worship is not considered as charitable. Thus, in determining whether a purpose is public or private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected, constitute a substantial body of the public.
• A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. The Associations which lack the public component such as trusts for the advantage of workers or employees of a company, however numerous – have not been held to be charitable. As long as the beneficiaries of the organization comprise an uncertain & fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to an assured religious faith or a set of persons of a certain religious persuasion, would not affect the organization’s ‘public’ character.
• Whether a trust, society or section-8 company (previous section 25), the Income Tax Act gives all categories equal treatment, in terms of exempting their income & granting 80G certificates &contributors to non-profit organizations areentitlementfor rebate in contrast to donations done. Foreign contributions to non-profits are governed by FC(R)A regulations

Formation & Registration of a Non -Profit organizations

• Trust Registration
• Society Registration
• Section-8 Company Registration (previous section 25)
• Special Licensing
• A public charitable trust is generally floated when there is property involved, especially in terms of land& building.
• Various states in India have various Trusts Acts in force, which rules the trusts in the state; in the absence of a Trusts Act in any specific state or area in the overall principles of the Indian Trusts Act, 1882 are applied.
• The foremost instrument of any public charitable trust is the trust deed, wherein the purposes& objects & mode of administration (of the trust) must be preserved. In every trust deed, the minimum & maximum number of trustees has to be stated.
• The trust deed must simply explain in simple terms the purposes& objects of the trust, how the trust must be managed, and how other trustees may be selected or removed, etc. The trust deed must be signed by both the settlers & trustees in the existence of 2 witnesses.
• The trust deed must be executed on non-judicial stamp paper, the value of which would be subject to on the valuation of the trust property.
• A trust requires a min of 2 trustees; there is no limit to the maximum number of trustees. The Board of Management consists of the trustees.

• The request for NGO Registration must be made to the official having jurisdiction over the region in which the trust is required to be registered.
• Subsequently giving details (in the form) about designation by which the public trust will be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee to the form & pay a registration fee which may range differently, depending on the location & value of the trust office & trust property.
• The application procedure must be signed by the applicant before the registrar, sub-registrar, deputy registrar, regional officer or superintendent of the regional office of the charity commissioner or authorized The application form would 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 & consent letter.

• Society Registration

• In accordance with section 20 of the Society Registration Act, 1860, the subsequent societies can be registered under the Act charitable societies, military orphan funds or societies established in India and societies which are established for the promotion of art, science or literature for education, the circulation of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or analysis rooms for over-all use amongst the members or open to the public, or public museums & galleries of paintings & other works of art, collection of natural history, mechanical & philosophical inventions, instruments or designs.
• Societies are 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 foremost instrument of any society is the memorandum of association (MOA)& rules & regulations (no stamp paper required), wherein the aims & objects & mode of management (of the society) must be enshrined.
• 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 type of a governing body or council or an executive committee.
• Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate & the local office of the Registrar of Societies)
• The procedure varies from state to state. However generally the application must be given together with memorandum of association & rules & regulations; consent letters of all the members of the managing committee; authority letter which shall be duly signed by all the members of the executive committee; an affidavit sworn by the president or secretary of the society on non-judicial stamp paper, together with a court fee stamp; & a declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims & objects of the society.
• All the aforementioned documents which are essential for the application for registration must be submitted in duplicate, together with the essential registration fee. The trust deed, the memorandum of association (MOA)& rules & regulations shall not be executed on stamp paper.

• Section 8 Company Registration

• In accordance to Section-8 of Indian Companies Act, 2013 (Old section 25(1)(a) & (b) of the Indian Companies Act, 1956, a section-25) a section 8 company can be established for encouraging commerce, art, science, religion, charity or any other useful object, provided the profits, if any, or other income is applied for promoting the objects of the companies& no dividend is paid to its members.
• Section-8 companies are registered under section 8 of Indian Companies Act 2013 (old section-25 of the Indian Companies Act, 1956).
• For a section-8 company registration, the main instrument is a Memorandum& article of association (no stamp paper required)
• A section-8 Company requires a minimum of 3 members; there is no upper limit to the number of members. The Board of Management is in the form of a Board of directors or managing committee.
• An application has to be made for availability of name to the registrar of companies, which must be made in the prescribed form INC-1, together with a fee. It is suitable to recommend a choice of 3 other names by which the company shall be called, in case the first name which is projected is not found acceptable by the registrar.
• 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 & articles of association of the proposed company, duly signed by all the promoters with full name, address & occupation.
• A statement by an advocate or a chartered accountant that the MOA&AOA have been drawn up in conformity with the provisions of the Act & that all the essential things of the Act & 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 & occupations of the promoters (& 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 & other institutions in which such promoters, partners & members of the proposed board of directors who are the directors or who hold responsible positions with description of the positions so held.
• A declaration presenting in detail the assets (with the estimated values thereof) & the liabilities of the association, as on the date of the application or within seven days of that date
• An estimation of the forthcoming annual income & expenditure of the projected company, specifying the sources of the income & the objects of the expenditure.
• A statement giving a brief description of the work, if any, already done by the association & of the work proposed to be done by it after registration, in pursuance of section-8.
• A statement which specifies briefly the grounds on which the application is submitted.
• A declaration by each of the persons making the application that he/she is of sound mind, not an undercharged insolvent, not convicted by a court for any offense &is not disqualified under Companies Act 2013, for appointment as a director.
• 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 situated) a copy of the application & each of the other documents that had been filed before the regional director of the company law board.
• 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 method at least in a newspaper in the principal language of the district where the registered office of the projected company is to be situated or is situated &circulating in that region, & at least once in an English newspaper circulating in that region.
• The director may, after bearing in mind the objections, if any, received within 30 days from the date of publication of the notice in the newspapers, & after consulting any of the authority, department or ministry, as the one may in their discretion agree to determine whether the license must or must not be granted.
• The director might also provide direction to the company to enclose in its memorandum, or in its articles, or in both, such conditions of the license as may be specified by one in this behalf.

• Special Licensing

• Additionally, to register, a non-profit involved in certain activities may also need special license/permission.

A place of work in a restricted area (like a tribal area or a border area requires a special permit – the Inner Line Permit – usual issues either by  Ministry of Home Affairs & by the relevant local authority i.e., district magistrate. To open an office & employ people, the NGO should be registered under the Shop & Establishment Act. To employ overseas employees, an Indian non-profit shall have to take FCRA registration & also acquire a No Objection Certificate (NOC) which needs to be registered as a trust/society/company. The intended employee also requires a work visa. The foreign company with non-profit motive setting up an office in India &requiring employees from abroad needs to be registered as a trust/society/company needs permission from the Reserve Bank of India & also a No Objection Certificate from the Ministry of External Affairs.