Under the provisions of Indian Companies Act, 1975, an organisation can be registered for charitable purposes as Non-Profit Company, meaning no profit of the company will be distributed among its promoters or directors. This is specially suitable for activities leading to economic welfare and micro-finance.
Formation of the NGO as Company:-
An NGO can also be registered with the Registrar of Companies as a non-profit organisation under section 25 of the Indian Companies Act, 1956. Under this provisions name of the NGO is allowed without the addition of suffix “Limited’ or “Private Limited”. Section 25 of the said Act prohibits payment of any dividend to its members.
The following steps should be followed for the proposed incorporation of the NGO:
a. First of all availability of the proposed name of the NGO should be ascertained.
b. On the finalization of name, the Memorandum of Association and Articles should be finalized.
c. Apply to the concerning registrar along with Memorandum of Association and Articles, prescribed forms and their documents. Three copies of the Memorandum and list of names addresses, description and occupation of the promoters should be submitted for incorporation along with the list of companies, association and other institutions it which promoters are directors or hold important positions; list of the members of proposed Board of Directors in the proposed Board of Directors, declaration in the prescribed form; triplicate copies of accounts, balance sheet and reports on working of the association for last two financial years and statement of assets and liabilities; sources of income and estimates of annual income and expenditure; a note on works already done by the association; reasons for incorporation; declaration of the applicant; certified copy of notice published in news letter and demand draft prescribed fee or its treasury challan .
A copy of the application along with all enclosures and attachments should be directed to the Registrar of companies of the state where the registered office of the company will be situated. After the draft of Memorandum and articles has been cleared by Regional Director, the association should apply to the registrar of companies in form No. 1 along with printed copies of Memorandum and Articles. The Registrar then issues a certificate of incorporation while charging a nominal fee