Registering a not-for-profit organisation in India

Section-25 companies

Legislation: Section-25 companies are registered under Section-25 of the Indian Companies Act, 1956.

Memorandum and articles of association: For a Section-25 company, the main instrument is a memorandum and articles of association (no stamp paper is required).

Trustees: A Section-25 company needs a minimum of three trustees; there is no upper limit to the number of trustees. The board of management is in the form of a board of directors or a managing committee.

Application for registration:

The first step in the registration process is the application to the registrar of companies for the availability of a name. This application should be made on the prescribed form number 1A, together with a fee of Rs 500. It is advisable to offer a choice of three other names, in case the name that is proposed is not found to be acceptable by the registrar. The name should reflect the nature and proposed objectives of the society.

Once the availability of name is confirmed, an application should be made in writing to the regional director of the company law board. The application should be accompanied by the following documents:

• three copies of the memorandum and articles of association of the proposed company, duly signed by all the promoters with their name, address and occupation
• 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
• three copies of a list of names, addresses and occupations of the promoters (and where a firm is a promoter, of each partner in the firm), as well as of the members of the proposed board of directors, stating the names of companies, associations and other institutions in which they hold responsible positions, if any
• a statement showing the estimated value of the assets and liabilities of the association, as on the date of the application or within seven days of that date

The applicants must also furnish to the registrar of companies a copy of the application and each of the other documents that have been filed before the regional director of the company law board.

Within a week from the date of making the application to the regional director of the company law board, the applicants must publish a notice at least once in a newspaper in a principal language of the district in which the registered office of the proposed company is to be situated and at least once in an English newspaper circulating in that district.

The regional director may, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspapers, and after consulting any authority, department or ministry, as he may in his discretion, decide whether the licence should or should not be granted.

The regional director may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the licence as may be specified by him in this behalf.