In this blogpost, Bhavneet Vohra, Student, Vivekananda Institute of Professional Studies, Delhi, writes about what is society, the procedure to register a society and the benefits of registering a society for an NGO.

 

What is a society?

Society in simple terms is a not- for- profit organization that is usually set up to do some good to the society and not for some personal interests. Any funds or profits that are earned by the society during a period of time should be strictly used for the purposes of the society only, which is for the purpose the society was setup. These funds or profits should not be distributed between the members of the society, as doing so will dissolve the sole purpose of setting up the not-for-profit organization.

A not-for- profit organization can be registered in any of the 3 ways which are as follows

1. As a trust
2. As a society
3. As a non-profit company (Section 8 of the Companies Act, 2013)

Under Indian law, society is constituted for any literary, scientific and charitable purpose or for any other purpose which is already described in the Society Registration Act 1860. Some of the purposes for which the societies can be formed are as follows:

1. For the promotion in the creative field or science, literature and fine arts.
2. To spread instructions, rules and specific knowledge like in the political field
3. For charitable purposes, military relief, or orphanages
4. To set up libraries for reading purposes for the general public, or to set up museums and galleries for keeping paintings of various talented to provide them a platform to exhibit their talent.
5. To set up community halls for various events for the public like weddings and processions.

(Section 20 of the Society Registration Act, 1870 includes all these purposes for the incorporation of the society)

According to the act in a society there must be a minimum of seven members, and there is no restriction on the maximum number of members a society can have.

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What does an Incorporated Society refer to

An incorporated society is basically in simple terms is a group or organization that has been registered under the Society Registration Act, 1860 which provides it authority to run all its affairs legally. In a society like the company the members of the society are not personally liable for society’s debts, contracts and obligations. There are a large number of organizations that have got itself registered and have become incorporated societies.

Benefits of registering as a society

Usually, the incorporation of society is not so essential, but it is usually recommended that to maintain a separate legal existence it is better to get itself registered or incorporated as it provides many benefits and advantages to the society and moreover it allows the society to maintain an individual existence.

There are many benefits that are offered by the government to the not for profit ventures which are as follows:

One of an essential benefit that is offered to the not for profit ventures is tax benefits

Non-profit ventures are eligible for income tax benefits if they are set up for the charitable purposes and satisfy all the requirements of the Income Tax Act.

Some of the more benefits are:

1. An incorporated society can lease, rent, buy and sell property, borrow money and enter contracts in its own name.  No member of the society can have personal rights or interests in any of the assets of the society.
2. An incorporated society will continue as a separate entity even though its membership changes.

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Since we can clearly infer from the above facts that incorporation of society has many benefits and provides many advantages to the society or any other non-profit venture.

So to enjoy all these benefits all societies usually believe in getting themselves registered under the Society Registration Act, 1860 and to carry out all its operations legally.

We have seen above that what the benefits for the setting up a society are and what advantages are offered when it gets incorporated. But for this, we also need to know that how the non-profit ventures like societies and trusts generate funds and how does it pay for it costs.

1. By generating revenues from its operations
2. By raising funds through donations.

For setting up an organization, be it a profit venture or non-profit venture in every case we need to file some documents and do some paperwork to make it legally enforceable and have some proof of its legal existence.

What are the documents that are required for setting up the society

Though for setting up a non-profit venture we don’t have to file many documents and we don’t have to undergo many formalities, but still there are some important documents that are needed to be filed to maintain its individual existence which are as follows:

1. Memorandum of association and rules and regulations
2. Consent letters of all the members of the managing committee
3. Authority letter duly signed by all the members of the managing committee
4. An affidavit sworn by the president or secretary of the society on non-judicial stamp paper of Rs.20-/, together with a court fee stamp
5. A declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society

These documents need to be certified by at least 3 members of the governing body and should be filled along with MOA..

• Proof of identity and address of governing body members
• Address of the registered office and consent
• NOC of the owner of the registered office premises
• A fee of rupees 50 is required to be paid

Some points that are to be kept in mind before the registration of the society which are as follows

1. First, we would have to see that whether there any separate society registration act separately and specifically for our own state.

For example like if I want to start a society in Delhi then I would have to look whether there is any separate procedure or act for the registration of society in Delhi.

2. If there is no separate Act, then law applicable to the whole center will be followed that is the Society Registration Act.
3. We should investigate about the special rules that are applied by the state for the non-profit venture as they will also have to be followed.

 

Since we have covered all the relevant details and all the basic concepts of the non-profit ventures which are further categorized into societies, trusts or section 8 companies, we now need to look into that what steps we have to undergo and what procedure do we have to follow for the incorporation of the society.

What are the steps and procedure for the registration of a society

The procedure to incorporate a society can be described as follows:

Any seven or more persons associated for any scientific, literary or charitable purposes can apply for registration of society. No limit on a maximum number of persons is prescribed under the Society Registration Act.

Registration of society is undertaken by a basic document of Memorandum of understanding and Articles of Association with the specified rules and regulations. Such document consists of Name, occupation and address of all members and with the rights, power, duties and responsibilities of each member of the governing body.

The Memorandum of Association must mention the following items:

• Name of the society
• Address of the registered officer
• Name, addresses, designations, and occupations of the members of the society.
• Objective of the society

1. Societies are registered by the association of at least 7 members. Each designated person will be elected by-election for 3 years at once or as specified by the society document.
2. The objects and rules of the society are formed as per the Societies Act, and one shall contact the society of registrar to have more details towards the creation of bye-law (Memorandum of understanding and articles of association). Also, one can ask the Auditor, chartered Accountant, Lawyers, Attorney to help in the bye-law creation.
3. No stamp paper is required for society registration. The governing body manages the society.
4. As per the Societies Act, the Governing body meeting and Annual general meeting should be conducted. Even a foreigner can be a member of a society in India.
5. The purpose and object of the society shall be literary, scientific or charitable purpose.
6. After registration of society, one shall apply for pan card if required. each year the accounts have to be  submited to the Registrar of societies.
7. Willfully providing false information or return or refusing or neglecting to send audited income and expenditure statement and information are offenses which can lead to fines or penalties.
8. It should be noted that name of our society should not be kept identical to any other society’s name according to the Society Registration Act.

Sources

http://lawsikho.com/

Society Registration Act

http://www.ngosindia.com