In this article, we will discuss trust, society, and section 8 company, and will try to conclude which one is the best to choose for your business. Still, before jumping on to that, we need to know that all these 3 are types of NGOs (non-governmental organizations).
First, we need to know what an NGO is? What are its objectives? How does it operate? What are its need?
So, What’s an NGO?
NGOs are non-governmental organizations; as the name suggests, they are generally formed independent of government, but they have to get registered with the government of India. NGOs usually work for charitable purposes and upliftment of society. They have different objectives from a private limited company. Their main objective is social welfare and not profit-making; that is why they are also known as NPO (non-profit organizations).
NGOs run differently with different objectives. Their registration and incorporation are additional to the other private companies.
Here are specific characteristics of an NGO that you should know before moving ahead.
Characteristics of NGO
Like any other company, NGOs also have a separate legal entity, which must be registered with the government.
- NGOs are formed with a definite purpose.
- NGOs are formed by a group of individuals with similar interests and purposes.
- NGOs are formed for social objectives, but they have little or no government interference.
- According to their object and goal, NGOs form their policies, regulations, rules, etc.
The main objective of NGOs is non-profit making.
The NGOs get funding from the public through donations.
Now that we have discussed all NGOs let’s talk about their registration. As we have discussed earlier it is mandatory for the NGOs to get registered with the respective government and department to become a legal entity. NGO is a broader term; it includes all the organizations whose object is charity. According to Indian law, there could be 3 forms of NGOs: a trust, a society, and a Section 8 company. All these 3 should have charity as their ultimate objective. They need to get registered under different acts, which are as follows-
Trust needs to get registered under the Trust Act of 1882
Society needs to get registered under the Society Act of 1860
A Section 8 company needs to get registered under the Companies Act 2013
What is trust?
A trust is nothing but the transfer of property, which can be anything, including shares, cash, or any other asset, to another person for the benefit of the third person. The trust needs to be registered under the trust act, of 1882. A trust is a legal arrangement between 2 parties for the benefit of a 3rd party, which is known as trustee/trustee. The instrument which regulates the trust is known as a trust deed. On the basis of the purposes, trust can be classified into 3 groups-
Private Trust
As the name suggests, the purpose of these types of trusts is to benefit the near and dear ones. They need to get registered under the Indian Trust Act of 1882.
Public Trust
Public trust is formed for the benefit of the general public, hence, their motive is to serve society in general not any particular person.
Public-Private Trust
The assets of such can be used for both public as well as private purposes. It is a hybrid combination of public and private trust.
What is society registration online?
A society is an association of individuals who come together and form an organization with the purpose of serving society, social welfare, society advancement, or any charitable motive. They usually work for the advancement of education, religion, sports, culture, art, etc.
Society registration online should be done under the society act, of 1860. The act was established to increase the legal prerequisites of society’s registration to promote free education,treatment, fine arts, and science to promote the poors and awareness for plentiful purposes. Most of the states have accepted this act with or without any amendment. It requires a minimum of 7 members to start a society in India. The question is why society registration is important? And how you can do society registration online?
According to the Society Act, of 1860, the registration of a society can be done for the following purposes-
- Promotion of Fine Arts
- Diffusion of Political Education
- Grant of Charitable Assistance
- Promotion of Science and Literature
- Creation of Military Orphan Funds
- Maintenance or Foundation of Galleries or Public Museum
- Maintenance or Foundation of Reading Rooms or Libraries
- Promotion or Diffusion or Instruction of helpful knowledge.
Following are the steps for society registration online in India
Step 1: Decide a unique name
Step 2: Draft a memorandum of association (MOA) and rules and regulations
Step 3: Collect all the required documents.
List of documents required for society registration online in India-
- PAN Card
- The Residence Proof
- Memorandum of Association
- Articles of Association
- Covering letter
- Address proof
- Governing Body
Declaration
Step 4: Submit all the documents and file for the registration. Once your society registration is done and approved, you can start the operations.
What is Section 8 company registration?
Like the other 2, a section 8 company also falls under the category of an NGO. To start a section 8 company a minimum of 2 members and 2 directors are required. These companies are registered under Section 8 of the Companies Act 2013, which is why it is known as Section 8 companies. Their object is charitable unlike the private limited companies, However, the registration process is quite similar but comes with a lot of benefits and advantages as compared to the private limited company.
The Section 8 company registration process or society registration requires complex documentation, and it’s a very daunting task to do everything. There are companies like Lawgical India that help people with the registration process and documentation. Lawgical India has a team of expert professionals who have been in this field for a long time and are aware of all the documents required and the entire registration process. You can approach them if you are looking to start an NGO and want help with registration and other legal stuff.
