Creation of NGOs

There are three types of constitution of Not for Profit Organisations (NPO)

1.                  Trusts

2.                  Societies

3.                  Section 25 Companies.

Few Important Aspects wrt creation of NGOs/NPOs

1.                  There must be a settler and at least two trustees for creating a trust. A settler may also be a trustee. It is advisable to always have an odd number of trustees so that decision can be taken without having same number of votes in favour and against.

2.                  Please remember that the settler does not have any voting power unless he is a trustee also.

3.                  There should be a trust deed that must be registered. When the trust deed is registered, the stamp duty is payable on the basis of Corpus donation received at the time of registration. So it is always advisable to keep the Corpus lowest so that stamp duty can be saved. The benefit in this is that if you increase the corpus funds subsequently, no additional stamp duty is required to be paid.

4.                  There can be two types of societies:

a.       State level society.

b.      All India Level Society.

5.                  For a State level society, there must be at least seven promoters, and these must not be blood related to each other. Here the technical point is that only seven promoters must not be blood related. But if you want to bring the blood related persons then increase the number of promoters by that extent beyond seven.

6.                  For an all India level society, there must be at least eight promoters and all of these must be from different states. These promoters also should not be blood related as discussed above.

7.                  Generally the difference among these two is that a state level society may not get aid from other state, although it can operate all over India. That’s why people prefer all India level societies.

8.                  Following are the documents that needed to be filed for registration of a society:

a.       A covering letter

b.      Power of Attorney – must be signed by all the promoters.

c.       Affidavit from secretary/president

d.      NOC for registered office address from owner with ownership proof.

e.       Memorandum of association and Rules and Regulations – must be signed by all the promoters on each page.

9.                  Please remember that you need to get the certificate of registration from the registrar, but as well you also need certified copies from him of MOA and Rules and regulations. Don’t forget to obtain these documents.

10.              Then following registrations, if applicable, are required :

a.       PAN

b.      TAN if TDS to be deducted for any payment.

c.       VAT/Sales Tax

d.      IEC Code

e.       Section 12AA

f.        Section 80G

11.              Then a bank account is needed to be opened, and a register of members is also required to be maintained.

12.              Section 25 companies’ incorporation is all same as other companies, except that at the time of registration you need a license to operate as section 25 company. And the certificate of Incorporation also bears the words ‘registered under section 25 of Companies Act 1956’ along with the company name.

All the above points are just the basic requirements that I came to know during a seminar of creation of NGOs and tried to share with you all.  Hope it will help you all in understanding the same.