An NGO is a not-for-profit organization or the voluntary citizen’s group working for social causes & various interests. NGOs perform a variety of services, humanitarian efforts for the different sections of the society & take grievances from citizens to the government. This article describes the Section 8 Company Registration procedure.
NGOs can be registered under any of the following laws in India-
Trust under Indian Trusts Act;
Section 8 Company under Companies Act;
Society under Societies Registration Act.
Things to know before NGO Company Registration
The following things must be kept in mind:
Obtain DIN- Applicants are required to get DIN by filing Form DIR-3.
Obtain DSC- proposed directors should provide Digital Signature Certificate because the forms have to be signed digitally. It may be noted that the certifying agencies under GOI provide DSC.
Procedure for NGO Company Registration
Step-1
Obtain DSC of the proposed directors of the NGO and then file Form DIR-3 to get a DIN.
Step-2
ROC allots DIN to the proposed directors.
Step-3
Apply for a company name
Step-4
After the name is verified and approved, apply for the license
Object must be Charitable or to promote arts, science, commerce etc.
Intends to apply all its profit in promoting the objectives.
Assures prohibiting of the payment of dividends to any of its members.
Advantages of Section 8 Company
The following advantages are enjoyed-
No Minimum Share Capital Requirement;
Easy Transfer of Ownership;
Tax Benefits;
No need to use “NGO” or “Limited” title;
No Stamp Duty;
Clear Objectives for easy donations and loans;
Easy to Manage;
Exemptions and Privileges under Companies Act, 2013[1];
Relaxation in Compliances.
Concerns Related to Section 8 Company
Profit or income of an NGO cannot be used for any object other than those mentioned in its MOA.
Distribution of profits or declaration of a dividend to its members is prohibited.
No member can be appointed as an officer of the company with any remuneration.
Its income is taxed at the similar rates as another company.
An NGO cannot alter the provisions of its MOA and AOA except with the previous approval of the Central Government.
Conclusion
In India, NGOs may be registered as Section 8 firm, trust or a society. It is much easier to manage, register and run an NGO that’s why people prefer it the most.
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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