Overview of Society Registration
When group of individuals unite to accomplish common purpose, it is referred as Society. Society Registration Act, 1860 governs the Registration of Society. When a Society registers, it becomes legal entity. Additionally, it brings uniformity in the way of working of Societies which helps in better governance too. It is mostly formed to carry out activities like scientific/charitable or literary works. The purpose of Society Registration can be underlined as it enables to give boost to legal conditions of Society. It also helps Society to get a legal status in India. In other words, it becomes a legal entity.
Significance of Society Registration
It is said that Society Registration helps in improving civic life of the people of the country. The imperative aspect for this Registration is that minimum seven members or more can create Society. Memorandum of a Society can be subscribed by Company/ people or Registered Society but it happens only in case Company/people or Registered Society does not belong to India. It becomes applicable only when Company/ people or Registered Society who stays in foreign location expresses interest.
Advantages for Society Registration
- Society gains a status of a legal entity.
- Sell, buy, rent as well as Right to lease are the facilities that can be availed by a Society.
- A membership of a Society may change but it will continue to be a separate entity.
- Income Tax exemption can be availed by a Society if a Society is incorporated.
- In case of unlawful activities, the members are held to pay the debts as well as obligations.
- In case of profit, if debts and obligations are incurred by members for the purpose of obtaining money, the members are liable to pay else members can’t be held liable.
- Incorporated Society is required to meet minimum requirements which are set by Incorporated Society Act 1908 which gives an assurance to members of the Society.
- The bank accounts can be opened by Society.
- Society gains recognition in front of Forums as well as Authorities.
Who can apply for Society Registration?
Society Registration Act, 1860 has set a list of candidates who are eligible for this. Minimum 7 or more members are required to create a Society.
Following are the members who can enroll for the Memorandum of a Society:
- Foreigners or a non-resident of India;
- Partnership Firm;
- Limited Company;
- Registered Societies;
- A minor (below the age of 18 years) is not eligible;
- Foreign & Indian Companies;
Importance of Society Registration in India
Section 20 of Societies Registration Act, 1860 defines the fundamental purposes to incorporate a Society:
- To grant charitable assistance;
- Create Military Orphan funds;
- Promote Science, Literature & Fine Arts;
- Diffuse or promote Political Education and useful knowledge;
- Foundation and maintenance of Reading Rooms or Libraries, Galleries or Public Museum.
Documents Required for Society Registration
The following documents are required for Society Registration as follows:
- Society’s name;
- Office’s address proof;
- Driving License/ Aadhaar/ Voter ID/ Passport of the nine members of Society as an identity proof;
- Memorandum of Association (two copies);
- Society Bye-laws (two copies).
Procedure for Society Registration
Society can be formed with a minimum 7 or more persons. Besides that, even foreigners and Companies can register for the Memorandum of Society. Authorities of State Government administer the Registration process of a Society. To undertake the online procedure, one needs to visit the official portal of MCA:
- Select Unique Name
The applicant must conduct comprehensive research to file a unique name for the proposed Society. One needs to ensure that the name is not deceptively similar or identical to another incorporated Society/Corporate body. In case you choose an existing name of a Society, then the party must provide written consent to the Registrar.
- Draft the Memorandum of Association
Now each establishing member of the Society must sign the Memorandum with Rules and Regulations of the Society. It should be witnessed by Notary Public, Chartered Accountant, Oath Commissioner, Gazetted Officer, First Class Magistrate or Advocate with their official stamp and complete address.
The Memorandum must contain the clauses given below:
- Name Clause;
- Objectives Clause;
- Registered Office Clause;
- Details such as names, occupations and addresses of the Executive Body/ Governing Body.
Rules and Regulations of the proposed Society should be certified by the President, Vice President and Chairman of the Society. It must specify the aspects mentioned below:
- Constitution of the Society;
- Terms of Member’s Termination;
- Details of the Office Bearer;
- Audit Compliance;
- Provision of the Meetings;
- Provisions of Legal Disputes;
- Income Source of the Society;
- Membership and Subscription;
- Election Norms;Society’s Dissolution.
- Prepare other Necessary Documents
Documentation plays a vital in the Registration criteria. Hence, affix the documents of Cover Letter, Minutes of the Meeting, Declaration, ID Proof, as prescribed by Society Registration Act, 1860. Here's how to check society registration online in India.
- File Documents with the Concerned Registrar
Once you have prepared all the documents, submit it to the concerned Registrar of your State with the fee. If the Registrar feels that your provided information is valid, then he will declare your Society as registered. You can check Society Registration status on the official website of Municipal of Corporate Affairs. Generally, it takes around one month to register the Society.
Limitations on Society Registration
Society also needs to bear certain limitations which are as follows:
- Only Public Trusts can enjoy Tax exemptions provided they are considered to be engaged. In charitable activities according to Income tax department.
- The possibility of Equity Investment as well as ownership is ruled out in case of Societies as they can’t go for it. Thus, it keeps commercial investors at bay who want to indulge in Microfinance.
- It lacks in professionalism.
- The managerial practices are not followed mostly.
- The commercial investors consider it as a risky investment which deters them to invest in bulk.
What are the Precautions while Keeping a Name of Society?
The precautions that one should keep in mind in finalizing the name of Society are as follows:
- The name of Society should be as per the rules laid out by Society Act, 1860 which states if identical name is selected, the Authority will reject it.
- The name should not be against State Government/ Government of India.
- The name should abide by Emblem and Names Act, 1950.
- No word or phrase must be included which goes against Government/Community.
What all should be included in Memorandum of Association?
Memorandum of Association includes list of things which are mentioned below:
- Society’s name;
- Society’s Registered Office;
- Society’s operational area;
- Society’s aims as well as objects;
- Directors and other Council details;
- Governing body;
- Desirous persons.
What all Attributes should Rules and Regulations include?
The attributes that should be included in Rules and Regulations are as follows:
- Society’s Constitution;
- Membership as well as Subscription;
- Members Termination;
- Office Bearer Details;
- Society’s Source of Income;
- Election Norms;
- Audit Compliance;
- Provision of Meetings;
- Society’s Dissolution;
- Legal Disputes Provisions;
Difference between Company Formed under Section 25 of Company Act, 1956 and Society Established under Society Registration Act, 1860
Company Formed under Section 25 of Company Act, 1956
Society Established under the Society Registration Act, 1860
Status of Legal Entity
It attains a status of legal entity
Certain limitations apply although it becomes a legal entity
A Goodwill is enjoyed by Company
Society is at par in terms of goodwill as Company
Levy of penalty
More penalty is imposed on Company as Company Act lays stringent norms
The penalties are less compared to Company
Provision of meeting
Company Act, 1956 lays provisions for meetings
Society Registration Act, 1860 lays provisions for meetings
Compliance & Management
The compliance as well as management is complex in addition to being time consuming
The compliance and management of Society is relatively easy
Selection of Name
Registrar of Company approves the name of Company
The name selection of Society is not difficult
Activities of non- profit nature are undertaken
The literary as well charitable activities are undertaken mostly
Creation & formation
There is a complex process for creation of Company
It is easy as well as simple
FAQs of Society Registration
The term “Society” denotes a group of people who came together to achieve a common motive.
The Society Registration Act 1860 acts as governing law for a society incorporated in India.
Yes, after registration, society becomes a Separate Legal Entity.
The purpose of Society Registration is to give a boost to the legal conditions of Society. It helps a Society to get legal status in India as well. In other words, it becomes a legal entity.
Society Registration helps in improving the civic life of the people of the country.
A Minimum of 7 seven members are required to incorporate a Society in India.
No, society will continue to exist.
Yes, a society can avail Income Tax Exemption under the Income Tax Act.
Individuals, Foreigners, Company, Partnership Firm, and Registered Society are eligible to obtain Society Registration.
The term “components” include Name, Object, and Details of the Members and Registered Office.
The term “Right” includes the Right to Vote, the Right to receive and copy of By-laws, the Right to Statement of Account, and the Right to Attend General Meetings.
The steps involved are convening a general meeting; passing of the resolution; signing of resolution; and submitting the same to the registrar.
No, as per section 14 of the Societies Registration Act, members are not eligible to receive a share in profits.
One can check the status on the Official Website of the MCA (Ministry of Corporate Affairs).
No, relatives are not eligible to become a member of a society.
Yes, the MOA of a Society can be amended by passing resolution in the EGM, and submitting the same to the registrar within 30 days.
The term “General Body” denotes the members who have subscribed the Memorandum of the Society.
The documents required include Name; Office Address Proof; Identity Proof; Copies of Memorandum of Association; and Copies of Society’s By Laws.
The steps involved are Select Name; prepare the Memorandum of Society; Formulate the Rules and Regulations; and Get it Registered by the Registrar.