NGO Registration: Difference in company, society, and Trust

Based on the structure, there are three types of NGO registration in India: Trust, Society, and Section 8 Company. All of these types are known and identified as NGO. But the main differences between them lies in the formation, registration, and management processes of each type.

Those intending to form or run NGO can check and identify what of NGO formation they would prefer.

Similarly, if you wish to register with NGO, then you must first check and identify what type of NGO registration you would like to enroll.

In this blog, our main focus is to make people familiar with the differences in three kinds of NGO registration. So keep on reading for interesting facts.

Differences in various types of NGO Registration

Law/Act applied for NGO registration

• Company: The law applied for this kind of NGO registration is the Companies Act, 2013 under Section 8.
• Society: It’s the Societies Registration Act. 1860.
• Trust: The Indian Trust Act applies for NGO registration under Trust.

Period for Formation

• Company: Generally, the time it takes to form is 3-6 months.
• Society: 1-2 months are required for Society.
• Trust: The period of formation for Trust, NGO is quite less as compared to the above two. It just takes from 2 days to one week.

Registering authority for NGO registration

• Company: Registrar of Company (ROC) is the registering authority.
• Society: Either Registrar or Deputy Reg. of Societies of the concerned State/Charity Commissioner.
• Trust: The registering authority for Trust is Sub-Registrar of registration/Charity Commissioner.

Name Approval before NGO registration

• Company: The application for name approval should be sent through an application to ROC.
• Society: Under Society Act, the name approval is only possible if any other NGO isn’t registered with the required name in the particular jurisdiction of registration.
• Trust: If the proposed name isn’t under the Emblem Act, then the name approval for Trust registration isn’t required.

Eligibility of Family Members to be the member of Organization

• Company: Under the Act, anybody can be the director of the company. Though, certain Govt. Ministries/Departments and funding agencies can refuse to fund for the company with the same family member as directors.
• Society: In a society, members of the same family can’t be the member.
• Trust: In a Trust, there isn’t any restriction on the formation, and hence, any family member can be a member of the organization. However, certain Govt. Ministries/Departments can refuse to fund to the Trust having the same family members as the Trustee. Therefore, initially, family members can be present to form NGO but at the period of funding from certain Ministries or Funding agencies, the trustees can be changed.

Transfer of Directorship/Membership/Trusteeship

• Company: If required, Directorship can be transferred and restrictions of the transfer can also be placed.
• Society: Under the Society Act, membership of society can’t be transferred.
• Trust: Under the Indian Trust Act, there is no provision for transferring the trusteeship to anybody.

Eligibility for payment

• Company: In Company (NGO), the General body of Company can approve to get payment.
• Society: Like the former one, the General body can permit and approve to get payment.
• Trust: Unlike the previous two NGOs, Trustee can’t receive payment. However, if there’s any provision to get funds in the trust deed then Trustees can receive payment for a project or if the trustee is offering professional service or consultancy.

Source url - http://enterslce.bcz.com/2018/11/19/ngo-registration-difference-in-company-society-and-trust

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