PROCEDURE FOR REGISTRATION OF SEC25 COS.

PROCEDURE FOR REGISTRATION SECTION 25----

Section 25 i.e. a non-profit company may be public or private. If the non-profit company is a private company a minimum of only two members is required to form it. However, if the non-profit from is for a public purpose, then a minimum of seven are needed.

1. Application for a name applying for availability of name to the Registrar of Companiesis the first step towards registration of the non-profit company. Four names are to be suggested to the Registrar in prescribed Form.

2. Memorandum and Articles Memorandum and Articles of the non-profit company are required to be approved by the Regional Director and the ROC. The documents required for submission of application are:

i)             Three printed copies of the memorandum and articles of association of the applicant company, signed by all the promoters with full name, address and occupation(No stamp duty is payable on the Memorandum and Articles of Association)

ii)            A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made there under have been duly complied with, in respect of registration;

iii)           List of the names, addresses and occupation of the promoters, members of board of directors, name of companies, associations and other institutions in which promoters of the applicant company are directors or hold positions, descripttion of the positions held by them (three copies)

iv)           Statement of assets and liabilities (“only existing company)

v)            Source of income of the Applicant Company and estimate of annual expenditure;

vi)           A statement giving a brief descripttion of the work, if any, already done by the association  and of the work proposed to be done by it after registration in pursuance of section 25;

vii)         A statement on grounds on which the application is made under section 25 of the Companies Act, 1956;

viii)        A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged solvent, not convicted by a court for any offence and does not stand disqualified under section 203 of the Companies Act, 1956 for appointment as director.

 3. License under section 25 An application for the license under 25 for the company is to be submitted to the Regional Director (Department of Company Affairs). The license essentially permits the word 'Limited' or 'Private Limited' to be deleted from name of the company. It could take upto 12 weeks after application to receive the license under section 25 of the Companies Act 1956. Pursuant to application to the Regional Director (within seven days thereafter), the applicant company has to publish a notice in a newspaper where the registered office is situate and certified copy of the notice to filed with the Regional director.

 4. Registration with ROC Registration certificate is normally granted within one month after filing section 25 licenses; Converting existing company to section 25 companies The Companies Act, 1956 also facilitates the conversion of an existing company to a non-profit company. Foreign Director There is no bar under Indian law for a foreigner to be a Director in a section 25 company, (relevant permissions prescribed under the Foreign Exchange Management Act.).

DIFFERENCE AMONG TRUST,SECTION 25 COMPANIES AND SOCIETY

BASIS OF DIFFERENCE	SECTION 25 COMPANY	SOCIETY	TRUST
BASIC DOCUMENT	Memorandum of Association Articles of Association	Memorandum of Association Articles of Association with rules & regulations.	Trust Deed – which contains objects of the trust (bye-law)
FORMATION	Little Hard	Simple	Easy
JURISDICTION	Registrar of Comapnies	Registrar of Societies	Deputy Registrar / Charity Commisioner
LEGISLATION / STATUTE	Indian Companies Act 1956	Societies Registration Act 1860	Relavent state Trust Act
OBJECTS	Nonprofit Activities	Literary, Charitable, Scientific and resource oriented	Social benefits & Charitable
MODIFICATION OF OBJECTS	Complicated Legal Procedures	Easy Legal Procedures	Alteration can be undertaken only by the Founder. If the founder is deceased alteration of objects is impossible
REQUIRED MEMBERS	Minimum = 7 Maximum = No limit	Minimum = 7 Maximum = No limit	Minimum = 2 Maximum = No limit
REGISTRATION	As per Companies Act under Section 25	As Society with Society Registrar	As Trust with the Registrar.
STAMP DUTY	No Stamp paper required for Memorandum of association and articles of association.	No stamp paper required for Memorandum of association, and rules and regulations.	4% of Trust property Value will be executed in non judicial stamp paper with the registrar
NAME	Prior approval required from Registrar of Companies.	Very easy to choose	Very easy to choose
MANAGEMENT BOARD	Board of Directors &  Management committee	Governing Body	Trustees
SUCCESSION IN MANAGEMENT	By Appointment	By Election	By Election
MEETINGS	Quite Extensive as per the provision of Company Law	Annual Meeting As per Law. Governing Body meeting as per the rules of Society.	No provisions
LEGAL STATUS	Full Legal Status	Limited Legal Status	Limited Legal Status
STATUTORY REGULATIONS	Exhaustive	Limited	Nominal
MEMBERSHIP TRANSFER	Free or Control as per desire.	Impossible	Impossible
MEMBER ADMISSION	General Body or Board Control through issue of Capital.	Governing Body Control	Not applicable
DISSOLUTION OR TAKE OVER BY STATE	Very risky and difficult	Possible	Possible
PAYMENT TO MEMBERS	As approved by Company & State.	Not restricted	As notified in Trust deed