Ngo’s are companies formed under section 8 of CoA,2013 (formerly sec 25 of companies act 1956) with charitable objects for promotion of arts, education, science, sports etc., and re-directs its profits for promotion of its objects and do not pay any dividends to its members. They are also called as not for profit companies and does not require minimum paid up capital to start.
There are several categories of Ngo’s apart from the routine which we hear like grass root development organization (which provides support to disadvantaged rural groups), advocacy groups and networks, relief and welfare agencies etc,. These are prominent in the other countries.
Section 8 companies are limited w.r.t. liability and government grants them license without using the word public limited or private limited as part of its name. These companies require two persons in case of a private limited company, 3 persons for a public company and minimum 7 members for a society. If we want to establish society at national level, then 5 of the members must be different other states out of 8 members.
Different acts applicable in India for an NGO’s
- Companies act, 2013 section 8 for Not for Profit Associations
- Indian trusts Act, 1882 applicable for trusts
- Societies Registration Act, 1860 applicable for societies
Forms involved for Registration of a NGO in India
- INC 1: The purpose of this form is Name approval. One must attach six names in order of preference.
- INC 7: Application for incorporation of a company .We can obtain a free registration form at district register office.
- INC 9: Affidavit from each director and subscriber
- INC12: The purpose of this form is to Grant License. Along with this form MOA must be attached as per the requirements of INC 13 and other required documents must be submitted.
- INC 14: Declaration from a practicing chartered accountant
- INC 16: License to incorporate as section 8 company
- INC 22: Address/location of registered office must be filed along with form INC 7 within 30 days of incorporation
- DIR 2: Consent of directors
- DIR 3: Application to ROC (Registrar of companies) to get DIN (Director Identification Number)
- DIR 12: as per this form the Appointment letters of directors must be filed within 30 days of their appointment
(DIR- document information record)
MOA & AOA
MOA (Memorandum of Association) is a charter to the company which must comprise details like name of the organization, address of registered office, objectives, number of members with their details etc,.
AOA (Articles of Association) is a document which comprises rules and regulations for internal management of a company.
For registration a company must first get a Digital signature certificate for it’s directors for a prescribed fee and later file form DIR 3 with ROC along with proof of identity.
For a trust, a trust deed prepared by CA or lawyer along with the information of trustees printed on a stamp paper attached with pan card details, photos and address proofs with nominal fee must be filed and within a few weeks you can get registered.
File form Inc 1 for applying name and on approval of it file form INC 12 with ROC to apply for license along with INC 13,INC14,INC15 and other documents like AOA, estimated like I & E (Income and Expenditure) for three years.
Later on grant of license under INC 16 we can file SPICE form INC 32 along with attachments as INC 9,DIR 2, MOA,AOA etc.
(INC 32 makes the job simple for registration by eliminating many steps of registration and it can be obtained by digital signature of a professional like CA)
If Roc is satisfied with the forms and procedures complied it issues certificate of incorporation along with a unique company identification number (CIN).
Section 8 companies registration is optional but by registering it has benefits like :
Advantages of registration of NGO
- By registration the name and logo of the company can’t be copied
- Tax exemption can be filed with national tax authority – Obtain Section 80G from IT, so that NGO can get donations which gives tax benefits for the donors so that there is an increase in scope of receiving donations etc,.
- FCRA (foreign contribution regulation act) funds for Indian registered Ngo’s
- Now many corporate companies are following the phenomenon of CSR (corporate social responsibility) and giving donations to welfare activities and registration plays a key role to be eligible for those benefits
*Now everything has turned online so one can comply online procedures in MCA website itself. The application which is filed to ROC now can be send to CRC (Central Registrar Center).
Or Company Vakil can help you register your NGO
(For eMOA – INC 33 and for eAOA – INC 34 are the forms)
Dissolution and punishments
On contravention of any provisions Central Government has every right to cancel the license if not satisfied after a change of being heard is given. In case of contravention or default the company is liable with fine which may extend from 10 lakhs to 1 crore and the director and every officer will be personally liable for fine 5 lakhs to 50 lakhs. So the company has to change itself to pvt ltd. (The MOA and AOA of a company can’t be altered without prior approval of CG)
After dissolution and payment of liabilities the left over assets must be transferred to Insolvency and Rehabilitation Fund under section 261 or to other company with similar objectives.
There are 3 options available for a company if notice received for dissolution under section 8 :
- Conversion into private ltd
- On public interest amalgamate with similar existing company
*Having a transparent, audited and systematic books of accounts are the basis of trust to get donations and benefits from government and foreign.
*Though for a noble cause it needs a lot of effort to establish so one must start improving net work right from the first step for not facing any hurdles in future and this network can be obtained by adopting different sources as involving more people, support of local leaders, engaging youth, and like-minded people, media, websites etc,.
*Section 8 company and convert into ordinary company by passing a special resolution