Comparisionof structures
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This document compares three entities for registering a charitable organization: society, public trust, and Section 25 company. [1] A society has the simplest registration process but lowest control over the entity. [2] A public trust offers more control but a slightly more complex registration process. [3] A Section 25 company has the most complex registration and compliance processes but provides the highest level of control over the entity. The document outlines various factors to consider such as registration requirements, governance structures, legal acts that apply, and estimated setup and compliance costs for each entity.
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Comparisionof structures
- 1. A COMPARATIVE PERSPECTIVE TO REGISTER MY CHARITABLE ENTITY Description Society Public Trust Section 25 Company Relatively simple procedure; Simple procedure; Complex procedures; Ease of Formation 8-12 weeks to setup 6-8 weeks to setup 12-24 weeks to setup Min # of subscribers Seven Two Two Control over the entity Low High Varies Statutory Regulation Very limited Nominal Exhaustive but mature The Societies Registration Act, Act of Registration Indian Trusts Act, 1882* The Companies Act, 1956 1860. Authority with whom to be Registrar of Societies of the Registrar of Company of the Assistant Charity Commissioner registered concerned state** concerned state Separate application not required. Prior Approval required as per the Approval of Name Name is generally granted if Not Required guidelines. May take two or more available weeks Memorandum of Association & Charter By Laws and Rules & Regulations Trust Deed Article of Association Can operate throughout India even if registered in one particular State. Area of operation Can operate throughout India Can operate throughout India No separate registration is required for operating in another state Rule of unequal voting power Voting Rights Equal Not Applicable based on share holding exists Controlled by general body or Admission of new members Controlled by governing board Not Applicable board through issue of capital Can be transferred. Restrictions Transfer of Membership Non transferrable Non transferrable on transfer can also be placed. Removal of Members Possible without consent Not Applicable Not possible without consent Board meetings must be held General & Board meetings are No provision in the act. regularly, normally once a General & Board Meetings required to be held as prescribed in Adequate rules can be framed in quarter. One annual general the by laws of the society the trust deed meeting. Proper detailed minutes to be maintained Permitted as per general body Provision should exist in trust Permitted as per general body Payment to Functionaries approval deed approval To be complied as per To be complied as per Labour and other relevant laws To be complied as per applicability applicability applicability One-time setup cost (approx.) 2-3 months & Rs. 50,000 1-2 months & Rs. 50, 000 4-7 months & Rs. 1,00,000 Ongoing annual compliance cost (only min statutory compliance 2-3 months & Rs. 30, 000 2-3 months & Rs. 30, 000 2-3 months & Rs. 30, 000 approx.) *Few states have enacted Public Charitable Trust Acts. Particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh have Public Trusts Acts. The provisions of Indian Trust Act, 1882 have been applied to Public Trusts. Where there is no specific Trust Act, trusts are registered under Registration of Documents Act **In case of Maharashtra and Gujarat, under the provisions of Bombay Public Charitable Trust Act, 1950, societies with charitable purpose have to be registered with charity commissioner. Note: The above legal structures are governed by Income Tax Act, 1961 for the purposes of income, taxation & exemption. The information provided in this document is not exhaustive and therefore members are requested to independently verify and validate the information prior to reliance or further use. Key Decision Criteria