NGOs are charitable avenues that work for the betterment of society. The NGOs in India can act as a Trust or Society or Section 8 company depending on their objectives and scope of operation. All these structures are governed by different legislation, namely- the Indian Trusts Act, 1882, The Societies Registration Act, 1860, and the Companies Act, 2013, respectively. Apparently, NGOs willing to register under any of these legislations have to serve different legalities and paperwork requirements. In this write-up, we will look into the registration aspect and drill down the details to be included in the application letter for NGO registration.
Legislations under which NGO can get registered
Charitable avenues in India have the leverage to get registered under anyone of the following legislation;
Indian Trusts Act, 1882
Trust deed shall act as an application letter for NGO registration. Unlike section 8 companies, there is no requirement for a separate form filing for Trust registration. Once the deed is prepared, the applicant needs to visit the registrar of the respective state for the deed approval.
Trust Deed: Mandatory Inclusion
Objects: This clause specifies the object of the trust for which it intends to come into effect. Once registered, the trust cannot perform any activities that fall beyond the scope of the underlying object.
Acceptance of Funds:
The trust can accept grants, aids, donations, and subscriptions from any individual, Government or any other charitable avenues, in cash or in the form of an immovable asset without any charge on it. There is a prohibition on fund procurement that does not fit the trust’s object.
Investments: It is the liability of the trustees to administer the trust’s funds efficiently. The funds that are expected to remain untouched in the near future should be invested in banks, Securities, and other investments to strengthen the trust’s finances.
Power of the Trustees: The trustees are liable to abide by the rules cited under the trust deed. Their actions should not fall beyond the norms mentioned in the registered deed. Generally, a trust deed confers the following authorities to the trustees.
- Appointing employees for the trust
- Selling, altering, and disposing of the trust properties
- Opening a bank account in the name of the trust
- Suit filing on the trust’s behalf
- Accepting any gift, contribution, donation
- Using funds in any investment instrument
- Handling the management affairs
Accounts and Audit:
This clause mandates trustees to administer proper books of accounts, income and expenses of the trust. Further, it also specifies the requirement of account auditing via a practising CA.
Winding up: As the name suggests, the winding-up clause deals with the rightful closure of the trust. It provides the grounds that ensure the lawful closure of the establishment.
The Societies Registration Act, 1860
A society or association is a group of individuals that serve a common non-profitable goal. As per the Society Registration Act, any entity willing to operate as a society needs to file an application with the respective registrar along with the documents listed below.
The details of the application letter for NGO registration under the Societies Registration Act, 1860 are as follows;
- Name and address of the society
- Objects of the society
- Name of the office bearers along with their designation, occupation, residential address, and signature
- Signature of the president
- Name of the witnesses, their age, address, occupation, and signature
The said application must be supported by the Rule and regulations of the society that contains the following details;
- Society’s name and address
- Activities to be performed by the society
- Details on how the meetings would be conducted, a quorum held, or obligations would be discharged.
- Society membership details relate to eligibility, admission, withdrawal, and termination of members.
- Details about office bearers and rules around their appointment, removal, recall and election.
- Provisions around the settlement of internal disputes as well as society’s dissolution
- Information around types of funds to be procured and members’ role in discharging the debts.
Section 8 company under the Companies Act, 2013
The registration application for the Section 8 companies can be submitted to the Ministry of Corporate Affairs[1]. The application used for this purpose is known as SPICe+.
The SPICe +, an Application letter for NGO registration, is divided into two parts, namely Part A and Part B.
- Part A deals the name approval services.
- Part B facilitates services like DIN allotment, TAN allotment, ESIC allotment, Opening of current bank account, etc.
Common documents required to be attached with SPICe+ application letter include;
- Memorandum of Article
- Article of Association
- Declaration by the first director
- Working premises proof (copy of utility bills)
- Copy of resolution
- Members’ identity and address proof
This is not an inclusive list as there are a few more documents that one has to upload for the registration process. Contact Corpbiz to get more information on that.
Conclusion
It’s noteworthy that the NGOs have the flexibility to get registered under any of the above legislations depending on their scope of operation and objectives. The licensing norms and paperwork for trust, society and section 8 entities are not the same. It is better to pay attention in the pre-registration phase and jot down legalities beforehand. Adding correct details in the application letter for NGO registration is a must to avoid any chances of rejection. The same concept applies to document preparation and arrangement. If possible, look out for professionals who have expertise in this area to avoid any mistakes during the registration process.
Read our Article:What is a Non-Government Organization and how does it work?
