What are the Popular Non Government Organisation (NGO) Entities in India?

If you are thinking for starting a new Non Government Organisation (NGO) in India then first you have to know, what is an NGO? and which popular NGO entity is best for your goal which you want to achieve;

 

ngo-entityWhat is an Non Government Organisation (NGO)?

Any organisation working for a social, cultural, economic, educational or religious cause is termed as an NGO or Non Government Organisation. NGOs have made favourable indents to needy sections of Indian society at par with a constantly changing socio-economic climate. NGOs have reached out to all sections of society including women, children, pavement dwellers, unorganised workers, youth, slum-dwellers and landless labourers.

Documents requirements for an NGO
  • Income & Expenditure Statement
  • Receipt & Payments Statement
  • Balance Sheet
  • Auditors Report
  • Activity/Annual Report of The Organisation for the previous year.
  • Budget Estimates for the project for current year
  • Details of Beneficiaries
  • Details Managing Committee
  • Details of Employees on Form
  • Copy of Registration Certificate
  • Memorandum of Association / bye-laws/ Articles.
  • Utilisation Certificate in respect of grants released in the previous year
  • List of Assets acquired wholly or substantially out of government grants under GFR 19

An NGO can also be formed under various legal identities:

(i)  Society registered under Societies Registration Act, 1860.

(ii)  Trust (Formed under the Trust deed and registered with Income Tax Authority.)

(iii) Limited company incorporated under section 25 of the Companies Act, 1956

(iv) Co-operative Society

(v)  Multi-State Co-operative Society

(vi) Trade Unions

(vii) Political Party in India

 

What is Trust?

A Charitable trust or Trust is a legal entity which can be set up by anyone who has decided to commit themselves in principle to setting aside some of their assets or income for Charitable causes. The main obligation is to work within the charitable purposes and the powers set out in the Trust Deed

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What is Society? 

A Society is formed when people come together to do something with some common purpose which is legal and useful for others. A society should generally not get into profit making activities. Societies are governed by the Societies Registration Act 1860.

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What is Sec. 25 Company? 

NON PROFIT COMPANY or Company under sec. 25 – is identical to an ordinary company in all respects except that it is not established for profit and commercial gain.  It is also called a Section 25 Company and is a voluntary association of people, registered under the Indian Companies Act, 1956. It is a company with limited liability that may be formed for “promoting commerce, art, science, religion, charity or any other useful object,” provided that no profits, if any or other income derived through promoting the company’s objects may be distributed in any form to its members.

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The main differences between a trust, a society and a section 25 company

Public Trust

Society

Section 25 Company

Statute/ Legislation Public Trust Act like Bombay Public Trusts Act of 1950 Societies Registration Act of 1860 Companies Act of 1956
Jurisdiction of the Act Concerned State where registered Concerned State where registered Concerned State where registered
Authority Charity Commissioner Registrar of Societies Registrar of Companies
Registration As Trust As society (and by default also as  Trust in Maharashtra & Gujarat) As Section – 25 company
Main Document Trust deed Memorandum of Associations and Rules & Regulations Memorandum and Articles of Association
Stamp Duty Trust deed to be executed on non-judicial stamp paper of prescribed value No stamp paper required for Memorandum of Associations and Rules & Regulations No stamp paper required for Memorandum and Articles of Association
Number of persons needed to register Minimum two trustees; no upper limit Minimum seven; no upper limit Minimum seven; no upper limit
Board of Management Trustees Governing body or council/managing or executive committee Board of Directors/Managing Committee
Mode of succession on board of management Usually by appointment Usually election by members of the general body Usually election by members of the general body

Co-operative Societies:

In India, cooperative societies were regarded as ideal instruments to motivate the people to come together and help themselves in the process of eliminating the unscrupulous middlemen making huge profit at the expense of the society.

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Multi-State Co-operative Societies:

Those co-operative societies, whose objects are not limited to one state and serving the interests of members in more than one state for social and economic betterment of its members are considered Multi State Co-operative Society.

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Trade Unions:

Trade Union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions

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Political Party:

Political Party is also a type of an NGO because it has many advantages which a NGO have. If you are thinking to make a new Political Party in India then first you have to know, what is a Political Party?

A political party is a group of citizens who come together to contest elections and hold power in the government. They agree on some policies and programmes for the society with a view to promote the collective good. Since there can be different views on what is good for all, parties try to persuade people why their policies are better than others. They seek to implement these policies by winning popular support through elections.

Three components are needed for a political party:

  • The leaders,
  • The active members and
  • The followers

The Indian political parties are categorized into two main types:

  • National level parties:

National parties are political parties which, participate in different elections all over India.

  • State level parties:

The state level political parties are those, which are recognized in less than four states and they work in the states.

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How to form companies under section 25 in India?

COMPANYConferring of corporate personality to associations that promote cultural and charitable objects, but exempting them from the operation of some cumbersome requirements (which are essential only for regulation of business bodies but are difficult for compliance by non-profit companies), are the noteworthy features that are provided under the Companies Act, 1956. According to section 25(1), “Where it is proved to the satisfaction of the Central Government that an association:

Is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object,

Intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members,

the Central Government may, by license, direct that the association may be registered as a company with limited liability, without addition to its name of the word “Limited” or the words ‘Private Limited’.”

Existing companies complying with the above requirements may also be given such license by the Central Government (Sec 25{1}). The License system presupposes imposition of conditions and compulsion to comply with them (sec {5}). It insists on duty not to alter the object clauses of its memorandum. It provides for revocation of licenses after due hearing in case of deviance from statutory requirement (Sec 25 {7} and {8}).

The Central Government by notification under section 25(6) has provided for several exemptions and privileges to non-profit companies. Prominent among them include exemptions from publication of name (sec147); exemption from filing of annual return about membership [sec166 (2)]; liberty to hold general body meeting on public holidays or outside the business hours [sec166 (2)]; reduction of time length of meeting notice to 14 days instead of 21 (sec 171(1)); requirement to keep books of account of past four years instead of eight years (sec 209(4a)); exemption from the requirement of Central Government’s permission for enhancing the number of directors (sec 259); relaxation in holding Board meeting (once in six months instead of three months)(sec 285) and its quorum (sec 287); competence of the Board to decide about borrowing of money, investing of funds or making of loan by circulation instead of by holding meeting (sec292);exemption from the requirements of intimating to the registrar the particulars about change in the composition of the Board (sec 303); relaxation in the matters of quantum loan or purchase of shares that can be made by the company without central government prior approval (sec 370 & 372). Finally, registration under section 25 is a prima facie proof that the body is not for profit and there is no element of sale when a club serves refreshments to the members and hence, Sales Tax is not applicable.

 

Documents required for company under section 25

  • Draft of the Memorandum and Articles of Association.
  • Details such as name, address, occupation of the promoters.
  • List of companies, associations in which the promoters are directors or hold responsible position with the description of the position held.
  • List of the proposed members of the Board of Directors.
  • Declaration signed by an Advocate / Chartered Accountant / Company Secretary on non-judicial stamp paper of appropriate value.
  • The proposed sources of income and the expenditures thereof.
  • A note on the proposed activities and also the past activities, if any.
  • A statement of the grounds for making an application under section 25. In this statement a reference to the relevant clause in the Memorandum of Association regarding the Vision and Mission of the proposed company should be made.
  • Declaration signed by all the promoters on non-judicial Stamp Paper of appropriate value.
  • In case of an existing society applying for conversion into a section 25 company, audited statement of accounts and annual report of the society for the past two years  should be submitted.
  • A certified copy of the notice to be published in newspapers.

 

To form a Company under Section-25 in India just fill this form: