What is an NGO?
Non – Governmental Organization is a voluntary association of persons working towards social welfare and development. These institutions work independently from government and have humanitarian and cooperative objectives rather than commercial objectives.
Thus, these are private agencies supporting developmental work at local, national and international level. These agencies are managed by the resources, funds and other kind of support of government, funding agencies, support agencies and help from business groups and people.
Furthermore, NGOs can get support in a variety of forms like private donations, grants, sale of goods or services etc.
In order to start an NGO, the association of persons must determine the purpose for which such a social organization needs to be formed. Thus, an NGO needs to have a clear and concise mission that reflects the values of such a social organization clearly in the framework and statement.
Furthermore, the target group of people as well as the priority of an NGO must be defined clearly.
Now there are typically two types of NGOs that function in any country.
- Registered NGOs
- Unregistered NGOs
Generally an NGO performing charitable, welfare or developmental activities does not have to get itself registered. However, there are some specific activities that can be carried out only if an NGO is registered under specific laws.
Thus, it is up to the governing board of an NGO to decide if it wants to get itself registered or not. However, a registered NGO has its own advantages.
How NGOs can Register in India?
So, if an NGO wishes to get itself registered in India, there are three ways in which it can do so. Accordingly, an NGO can register itself as a:
- Society under the Societies Registration Act 1860
- Trust under Indian Trusts Act, 1882
- Section 8 Company under the Companies Act, 2013
This article talks about NGO Registration as a Company as per Section 8 of the Companies Act, 2013.
What is a Non-Profit Company?
A company formed with charitable objectives as per Section 8 of the Companies Registration Act, 2013 is known as a Non-Profit Company.
Thus, as per Section 8, a Non-Profit Company is the one where a person or an association of persons intends to get registered under the Companies Act, 2013 as a Limited Company and:
- has the objective to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment and any such objective
- possess an intention to apply profits to promote any of such objectives
- prohibits payment of dividend to any of its members
The Central Government may, after proper scrutiny, allow such a person or association of persons to get registered as a Limited Company under the Act. Thus, such a company gets registered with the Registrar of Companies by making an application with the Registrar in a prescribed format.
Registration Process – Section 8 Company
A non profit company promoting social development, social welfare and charity work needs to register itself under section 8 of the Companies Act, 1956.
Further, a minimum of three members are required to form a section 8 company. However, there is no upper limit on the number of members.
Also, no stamp paper is required. However, both MOA and AOA of section 8 company needs to be submitted. Accordingly, following is the procedure for its registration:
1. Obtain Digital Signature Certificate
A Digital Signature is nothing but an authentication of any electronic document by a subscriber to the document. Such an authentication is done by the way of an electronic method or process according to Section 3 of The Information Technology Act, 2000.
Since all the forms required for the registration of a Non-Profit Company need to be filed online, Digital signatures of the proposed directors of the company are required. All such forms need to be signed digitally.
Thus, any person seeking to obtain DSC needs to apply to the Certifying Authority for the issuance of such a Certificate in the form and manner as may be prescribed by the Central Government.
These Certification Authorities have been appointed by the Office of the Controller of Certification Agencies (CCA) under the provisions of the Information Technology Act, 2000.
There are two types of Digital Signature Certificates that are valid. These include Class II and Class III Certificates.
Class II is a type of DSC in which the identity of the person is verified against a trusted pre-verified database.
Whereas Class III is the highest level of DSC wherein the person applying for DSC must appear before the Registration Authority and prove his or her identity.
2. Apply For Director Identification Number (DIN)
As per Section 153 of the Companies Act, 2013, every applicant who intends to be appointed as director of an existing company shall make an application to the Central Government electronically in Form DIR-3.
Such an application for allotment of a Director Identification Number (DIN) must be accompanied by a fees as prescribed under the law.
Further, if proposed directors do not have approved DIN, the particulars of maximum three directors shall be mentioned in Form No.INC-32 (spice) and DIN may be allotted to maximum three proposed directors through Form INC-32 .
3. Apply for Name Approval in Form RUN
You must apply for the company name in Reserve Unique Name (RUN) facility on the MCA Portal. So, login on MCA portal into your account and click ‘RUN’ in MCA Services.
Earlier, Form INC-1 was used for name approval, but from January 26, 2018, this Form has been omitted from the Companies Act.
Thus, RUN facility allows for one resubmission and two proposed names while applying a company name. Further, a fee of Rs. 1000 needs to be paid before submission of the form.
Following details need to be filled in the ‘RUN’ Form:
- Type of entity which includes options like New Company/Part I Company, Producer Company, Unlimited Company, Private (OPC), IFSC Company, Section 8 Company and Nidhi Company
- Corporate Identification Number
- Proposed Name
- Comment that states the objects of the proposed company and any other important information
- Choose File where you can upload documents
Thus, once the name gets reserved, it remains valid for a period of 20 days from the date of approval of such a name.
4. Prepare MOA and AOA
The Memorandum of Association and Articles of Association are drafted once the Registrar gives the approval for the name of the company.
Memorandum of Association (MOA) is the charter of the company and it lays out the scope of activities of the entity. Whereas, the Articles Of Association (AOA) lays down the rules and regulations that govern the management, internal affairs and conduct of business.
MOA of section 8 company must be in form INC 13. However, there is no prescribed format for AOA for a section 8 company.
Further, each subscriber to the memorandum shall sign the MOA and AOA of the company. Also, each such subscriber shall mention his name, address, occupation and description on both MOA and AOA.
This must be done in the presence of at least one witness who must further attest the signature and add his signature and name, address, occupation and description.
5. Application for License in Form INC 12
Once the Central Registration Centre (CRC) approves the name for section 8 company, you are required to make an application to the registrar for a licence under section 8(1) of the Companies Act, 2013.
This application needs to be made in INC 12 along with a requisite fee of Rs. 2000. Furthermore, along with the application in INC 12, following documents need to be attached.
Documents For Section 8 Company (Non-Profit Company) Registration
- MOA in INC 13
- AOA (there is no specific format for AOA)
- Declaration by company secretary, chartered accountant, cost and works accountant in form INC 14. Such a declaration needs to communicate that the draft memorandum and articles of association have been prepared as per the provisions of section 8 and rules there-under. Further, it should also proclaim that all the requirements of the act and the rules there under regarding registration of a company under section 8 as well as other supporting rules have been adhered to.
- Each of the persons making the application need to make a declaration in form INC 15.
- A statement giving an estimate of future annual income as well as the expenditure of the company for the next three years needs to be given. Further, such a statement needs to specify the sources of income as well as the items on which the expenditure is incurred.
- The applicant also needs to submit the name approval letter received from the Central Registration Centre.
It is compulsory for the applicant to attach the above documents in form INC 12. Further, it is suggested that the applicant also attaches the work desired to be undertaken by the company after its incorporation.
Additionally, he needs to give reasons of application for issue of licence under section 8. Therefore, after form INC 12 is approved the applicant is issued a licence under section 8 in form INC 16. So the applicant is required to attach this licence in form SPICe.
6. Filing SPICe – 32 Form
SPICe form was introduced by the ministry under the Companies Act, 2013. Such a form serves the following purposes:
- Incorporation of a new company
- Reservation of a company name
- Application allotment of DIN
- Application for PAN and TAN
So, after the applicant receives approval from the central government with regards to licence in form INC 12, he needs to fill the form SPICe – 32. Following are the documents that need to be attached along with form SPICe 32.
Documents For SPICe 32 Form
- Memorandum of Association (MOA) in form INC 13
- Articles of Association (AOA) (There is no specific format for the same)
- Affidavit and declaration by first subscribers in form INC 9
- Declaration by first directors in DIR 2
- PAN card of first directors and subscribers
- Aadhaar card of first directors and subscribers
- Address proof of registered office like sale deed/lease deed/rent agreement etc
- Copies of utility bills not older than two months like electricity bill etc
- Licence issued in form INC 16
- NOC from the owner of the property if registered office is taken on rent or lease
In case of registration of section 8 company, it is mandatory for the applicant to file MOA and AOA as PDF attachments along with form SPICe 32. Thus, the applicant cannot use forms SPICe 33 and 34 for filing MOA and AOA respectively for section 8 company.
7. Fill PAN and TAN Details
It is mandatory for the applicant to fill in the PAN and TAN details in the SPICe Form. Once all the details are filled, the applicant needs to submit the Forms on the MCA website along with the fees.
8. Issuance of Certificate o Incorporation
Once the Form is approved, the Registrar of Companies issues a Certificate of Incorporation in Form INC-11 in electronic form. Such a certificate is sent to the applicant via email at its registered email ID.