Forming an NGO
The public charitable trust is a possible form of not-for-profit
entity in India. Public charitable trusts can be established for
a number of purposes, including the relief of poverty, education,
medical relief, provision of facilities for recreation, and any
other object of general public concern and utility. Indian public
trusts are generally irrevocable in nature. But it can also be liquidated
by government if the situation demands.
A Non Governmental / Profit Organization could be registered under
any of the following Indian Acts:
A. As a Charitable Trust under Bombay Public Trust Act 1950 (click
here for annexure I)
B. As a Society registered under the Societies Registration Act
1860 – A Central Statute
(Click here for annexure II)
C. As a Company licensed under section 25 of the Companies Act
1956. (Click here for annexure III)
If the registration is being made in Maharashtra and Gujrat, it
has to be registered under A and B of above Acts.
But in the case of any other state, they may have their own state
legislature along with the central statue i.e. B of above, for the
registration of voluntary organization.
Here, in this module, we will discuss the procedures in relation
with three legislations given above.
Right Authority
Charity Commissioner is an authority to provide legal
identity to any NGO. Concerned regional office of Deputy / Assistant
Charity Commissioner should be contacted for the process of NGO
registration. Although NGO is registered in a specific regional
office, the area of operation could be anywhere in India. Charity
Commissioner’s office is located at the following address
Dharmaday Ayukta Building
3rd floor, Dr. Annie Besant Road
Worli, Mumbai- 400018,
Phone No: 022-24935474, 022-24935516
1. Following are the steps to be taken while registering
the NGO under the Bombay Public Trust Act 1950
A. The application for registration of a public charitable
trust should be submitted under section 18 of the BPT Act 1950 to
the Deputy / Assistant Charity Commissioner having jurisdiction
over the region / sub-region in which the trust is sought to be
registered. The application should be made in a prescribed form
(Click
here for annexure V) which is available at the office of Charity
Commissioner or Deputy / Assistant Charity Commissioner. Fill up
the form accordingly with details of name of Trust, names of trustees,
mode of succession etc. This application should be supported by
covering letter (Click
here for annexure VI)B. The applicant has to affix a court fee
stamp of Rs.100.00 on the form and pay the registration fee in cash
which may range from Rs.3.00 to Rs. 25.00 depending on the value
of a trust’s property. If the value of the trust’s property
does not exceed Rs. 2000/-, the registration fee levied is Rs. 3.00.
If the value exceeds Rs. 25000/-, it is Rs. 25.00. Along with these
formalities there is a need to submit address proofs such as electricity
bill, telephone bill, or bank pass book details for the registered
office of organization. C. The application form should be signed
by the applicant before the regional officer or superintendent of
the regional office of the Charity Commissioner or the Notary. The
application should be submitted together with the copy of Trust
Deed. D. The original copy of Trust Deed may be produced, later
for verification which is the important and mandatory instrument
of Trust. (Click
here for annexure VII for copy of model trust deed) The Trust
Deed is a document that every trustee must turn to, whenever in
doubt regarding the aims and objectives, mode of succession or any
issue concerning the management of the trust. A Trust may be created
by any language sufficient to know the intention and no technical
words are necessary.
A trust deed, generally, incorporates the following…
Ø The name(s) of the author(s)/settlor(s) of the trust;
Ø The name(s) of the trustee(s);
Ø The name(s) if any, of the beneficiary/ies or whether it
shall be the public at large;
Ø The name by which the trust shall be known;
Ø The name where its principal and/or other offices shall
be situated;
Ø The property that shall devolve upon the trustee(s) under
the trust for the benefit of the beneficiary/ies;
Ø An intention to divest the trust property upon the trustee(s);
Ø The objects of the trust
Ø The procedure for appointment, removal or replacement of
a trustee, their rights, duties and powers etc;
Ø The rights and duties of the beneficiary/ies;
Ø The mode and method of determination of the trust
The trust deed must be executed on non-judicial stamp paper, the
value of which would depend on the valuation of the trust property.
According to article 61, together with article 13, of the Bombay
Stamp Act, for “every five hundred rupees or a part thereof
the stamp is Rs. 20.00. It is advisable to use both the sides of
paper, other than the stamp paper. Trust Deed should be signed by
both the settler/s and trustee/s in the presence of witness. The
witness might be a friend or relative. F. Two other documents which
should be submitted at the time of making an application are (1)
Affidavit (Click
here for annexure VIII for the copy of model affidavit) which
must be sworn by trustees before a notary and executed on non judicial
stamp paper of Rs. 10.00 (2) Consent Letter (Click
here for annexure IX) which may be prepared on the ordinary
sheet of paper and signed by the trustee/s other than the trustee
making an application. G. Processing the application usually takes
about six to eight weeks. A notice informing the applicant about
the day and time of the formal hearing is dispatched usually 10
to 15 days in advance. The applicant has to appear in person or
can depute his or her lawyer. The original trust deed should be
produced for verification at the time of hearing.
Following points are inquired by deputy/ charity commissioner at
the time of verification. a. Whether a trust exists and whether
such trust is public trust.
b. Whether any property is the property of trust
c. Whether the whole or any substantial portion of the subject matter
of the trust is situated within his jurisdiction
d. The names and the addresses of the trustees and managers of trust
e. The mode of succession to the office of the trustee of trust
f. The mode of succession to the office of the trustee
g. The origin, nature and object of trust
h. The amount of gross average annual income and expenditure of
trust
i. Any other particulars as may be prescribed under sub-section
(5) of section 18.
After making inquiries on the aforesaid issues, the deputy/assistant
charity commissioner makes the entries on the register kept under
section 17 of BPT Act 1950 (Click
here for Annexure X) and issues a Certificate of Registration
which bears the official seal and registration number of the trust.
On the lost or damage of such certificate over the years, the duplicate
certificate could be obtained on application and on payment of nominal
fees.
2. Process of registration for Societies under Societies
Registration Act 1860
In Maharashtra, NGOs registered with charity commissioner
needs the registration under two distinct acts. One was BPT Act
1950 which we have seen earlier, and another is Societies Registration
Act 1860. Both these legislations are considered while registering
a charity trust or NGO. Here, we will understand various aspects
which need to be taken care of while registering the NGO under Societies
Registration Act 1860. When an NGO is constituted as a society,
it is required to be registered under the Societies Registration
Act, 1860. A society may be defined as an association of persons
united together by mutual consent to deliberate, determine and act
jointly for same common purpose. Minimum seven persons, eligible
to enter into a contract, can form society.
Following are the steps to be taken to register the society:A.
The application for registration of a society should be made to
the assistant registrar of societies who is nothing but the assistant
charity commissioner having jurisdiction over the region/sub-region
in which the society is sought to be registered. B. The application
(Click
here for annexure XI) should be submitted in prescribed form
together with., i. Memorandum of Association in duplicate
(Click here for annexure XII) need not to be executed on stamp
paper
ii. Rules and regulations need not to be executed on stamp paper
iii. Consent letters of all the members of the managing committee
(Click
here for annexure XIII)
iv. Authority letter duly signed by all the members of the managing
committee (Click
here for
annexure XIV)
vi. An affidavit (Click
here for annexure XV) sworn by the president or secretary of
the society on non-judicial stamp paper of Rs.10.00, together with
court fee stamp
vii. Declaration by the members of the managing committee that the
funds of society will be used only for the purpose of furthering
the aims and objects of the society. In the state of Mahrashtra
since the registrar of societies is the charity commissioner, all
the societies also have to be registered as a trust; hence an application
should also be made u/s 18 of the Bombay Public Trust Act 1950 which
we have discussed earlier.
3. Registration of charity organization / NGO under
section 25 of Indian Companies Act 1956
According to Indian Companies Act - 1956, the company
for the promotion of commerce, art, science, charity or any other
useful purpose and it intends to apply its profits, if any, or other
income in promoting its objects and prohibits the payment of any
dividend to its members, then the government may, by a license,
direct that the association be registered as a company with limited
liability without the addition to its name the word “Limited”
or “Private Limited” Following are the steps to be taken
to register the organization under sec 25:
· The first step towards registration of a company (under
section 25 of the Indian Companies Act) is the application for the
availability of name to the registrar of companies, which must be
made in the prescribed form no. 1A (Click
here for annexure XVI), together with the fees of Rs. 500.00.
It is advisable to choice three other names by which the company
will be called, in case the first name which is proposed is not
found acceptable by the registrar. Once the availability of name
is finalized the application has to be made in writing to the regional
director of the company law board. The application should be accompanied
with following documents. 1. Three printed or typewritten copies
of Memorandum and Articles of Association of the proposed company,
duly signed by all the promoters with their full name, address and
occupation
2. A declaration (Click
here for annexure XVII) by an Advocate / Chartered Accountant
that the memorandum and articles of association have been drawn
up with conformity with the provisions of the Act 3. Three copies
of a list of the names, addresses and occupations of the promoters
as well as of the members of the board of directors, together with
the names of companies, associations and other institutions in which
such promoters, partners and members of the proposed board of directors
are directors or hold responsible positions, if any, with description
of the positions so held. 4. A statement showing in detail the assets
(with the estimated values thereof) and liabilities of the organization
as on the date of application 5. An estimate of the future annual
income and expenditure of the proposed company, specifying the sources
of the income and the objects of the expenditure. 6. A statement
giving a brief description of the work, if any, already done by
the organization and proposed to be done. 7. A statement specifying
the grounds on which the application is being made. 8. A declaration
by each of the person making an application stating that he / she
is of sound mind and not having any insolvency, not convicted by
the court of any offence and does not stand disqualified u / s 203
of the companies Act 1956, for appointment as director.
(Click here for annexure XVIII)· The application should
also, within a week from the date of making an application to the
regional director of the company law board, publish a notice in
the prescribed manner
(Click here for annexure XIX) at least once in a newspaper in
a local language of district in which the registered office of the
proposed company is located, and at least once in a English newspaper
circulating in that district. · It is in the hands of regional
director to verify all the facts and then to provide a license.
Normally it takes two to three months to accomplish the entire process.
Click here for Entire
model document is given as annexure XX.
References
1. Book: Management of Philanthropic Organizations by Noshir H Dadrawala
2. Inputs from FMSF India.
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