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Formation of Non Profit/Section 25 company

Section 25 Company or a Non-Profit organization (NPO) is a Company established for promoting commerce, art, science, religion, charity or any other useful object, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. An NPO/NGO can be formed for promotion of any useful object like sports, education, research activities etc. The term No Profit does not mean that the Company cannot generate profit or income, but it essentially means applying the income for further promotion of the object and not for distributing it to the promoters. It means that the Company can earn profits but the promoters cannot be benefited out of those profits. Key Benefits: Many privileges and exemptions under Company Law. Exemption from requirement of Minimum Paid-up capital. Exemption of Stamp duty for registration. Non-application of Companies Auditors Report Order (CARO) 2003. Registered partnership firm can be a member in its own capacity. Tax deductions to the donors of the Company u/s. 80G of the Income Tax Act. Key Conditions: Profit or Income of the Company shall be applied for the promotion of the mainobject Declaration of dividend or distribution of profit to the promoters is not allowed No member shall be appointed as a remunerated officer No remuneration / benefit shall be paid to a member being a servant / officer of the Company (except reimbursement of out of pocket expenses, reasonable interest on money lent or reasonable rent on the premises) Subsequent alteration of MoA & AoA requires prior approval of Central Govt. (i.e. Regional Director) Key Requirements:

Minimum 2 Shareholders (for Private Limited Co.) and 7 Shareholders (for Public Limited Co.) Minimum 2 Directors (for Private Limited Co.) and 3 Directors (for Public Limited Co.) The directors and shareholders can be same person DIN (Director Identification Number) for all the Directors DSC (Digital Signature Certificate) for two of the Directors Steps involved in formation of Section 25 Company/ Non-Profit organization Step No. 1 DSC Steps Timeframe(Working days) Processing

Documents required: Self attested Address proof Identity proof

DIN Approved DIN is a pre-requisite for incorporation process

Apply for DIN and get a provisional DIN Certification/Attestation of Directors personal details Sending the same to the DIN Cell and getting it approved

Pre- Name Application Search

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The Promoters have to provide atleast 6 (Six) names in the order of priority. To make an online search of availability of names as desired by the Promoters

Application for Name Availability 6 names for the proposed Company Main Object Clause

To draft the Main Object Clause to be pursued by the Company after incorporation.

Representations before RoC on behalf of Promoters

Changes to be made in the Name application, if any, suggested by the RoC

Application to Regional director (RD) for issue of License

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Filing of Form 24A Attachments: 3 Printed Copies of MOA & AOA List of Directors Declaration from a practicing Company Secretary Declaration from Promoters Consent to act as Directors of the Company Statement of assets and Liabilities Statement of proposed work Statement of estimated Income & Expenditure Statement of grounds Copy of advertisement/Public Notice Power of attorney Photocopy of name approval letter

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Representations before RD in case of any objections Public Notice/Advertisement

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Changes to be made in the relevant documents, as suggested by the RD

With in 7 days of application to the RD Shall be published in one newspaper in principal language of the district (district of Registered office of the proposed Company) and in one English newspaper

Documents required (after issue of license by RD) Printing of Altered Memorandum and Articles of Association (MOA / AOA) Other Forms like: Form 32 Form 18 Form1 Letter of Authority/PoA

Stamping of documents namely: Letter of Authority/Power of Attorney Form1 Processing of eForms

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Online uploading of e-Forms Payment of Registration fees Collecting the Certificate of Incorporation

Filing all the above documents with the ROC Follow up with the ROC office
11 Application for Certificate of Commencent of Business 10

In case of NPO being a Public Limited Company Documentation Preparation of Statement in lieu of Prospectus (SLP)(If the Company is not issuing the Prospectus to raise funds from general public) CA certification of SLP Preparation of Form 20 Consent letter of the Auditor Preparation of Statement of Preliminary Expenses Online filing of eForm 20

A Public Limited Company, in addition to Certificate of Incorporation, must obtain a Certificate of Commencement of Business before its operation

Steps for Registration of a Section 25 Company Step-1 Apply in Form No. 1A to concerned ROC, for availability of name in order of preference (without addition to its name of the word "Limited" or the words "Private Limited"). Step-2 Prepare Memorandum & Articles of Association. Step-3 Make an application in E form 24A online to the Concerned Regional Director for issue of license under Section 25 of the Companies Act, 1956. The application should be accompanied by: Three Copies of MoA & AoA of the proposed Company. A declaration confirming the application by CA / CS / Advocate on prescribed Stamp Paper. Three copies of list of names, descriptions, addresses & occupation of the promoters as well as the members of Board of Directors of the proposed Company. A statement showing details of assets & liabilities of the Association as on date with the application. An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure. A statement giving brief description of work, if any, already done by the association. A statement specifying briefly the grounds on which the application is made. A declaration in prescribed form on non-judicial stamp paper by each person making an application. A letter of authority. Payment of prescribed fees. Step-4 Notice pursuant to regulation 11 of the Companies Regulation, 1956 shall be published within one week before or after the admission of the application in one or more newspapers (one in English and other in vernacular local newspaper). Step-5 Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies. Step-6

The Concerned RoC do the scrutiny of the information of Directors and Promotors of the Proposed company and sent a Scrutiny report to the concerned RD within 15 days of the receipt of such application. The concerned ROC also gets the draft MOA & AOA vetted and then list outs the modifications considered necessary and forwards the same to RD within fifteen days of receipt of the copy. He may normally advise RD to grant license to the proposed company or not. Step-7 The concerned ROC may consult for the views of District Magistrate of the state within whose jurisdiction the registered office of the proposed company is to be located. Copy sent to RD and reply is generally directly received by ROC from DM. Step-8 In case, the considerations for issue of license are more important, the RD may consult the State Government too. The RD may also consult the ministries concern and determine, if any, objections received. Step-9 On receipt of the above papers, the RD gets the MOA & AOA and other papers generally scrutinized. Step-10 Having received all the necessary views from the ROC, DM, State Government, the RD will take the decision for grant of license to the application or not. (Generally the license is granted within 30 days from the date of filing of application with the RD). Step-11 Departmental instruction shall be strictly followed. The license may be revoked, with Company's right to be heard. Step-12 After obtaining the license the MOA & AOA be printed as approved. Step-13 File the necessary papers with ROC for registration along with filing fees (maximum filing fees payable is Rs.5000/-) and also produce the license granted by the RD. The Stamp duty is also chargeable in some states these days.

Step-14 The ROC on making necessary scrutiny and correction will issue the certificate of incorporation. Check List for registering a company under Section 25 Step Particulars of Action/ Documents Required Processing No. Period 1 4 Apply in Form No. 1A to concerned ROC, for availability of 3 working name in order of preference. Info required: days Full name & residential address of each of promoters. ames of the proposed Company in order of their preference (without addition to its name of the word "Limited" or the words "Private Limited"). Proposed main object of the proposed Company (shall be one as depicted u/s 25 of the Companies Act, 1956). Mention that the proposed Company is to be formed under provisions of Sec. 25 of the Companies Act, 1956 2 4 After the name is approved, prepare Memorandum & 3 working Articles of Association; preferably get it vetted by ROC / days RD. Keep in mind that the MOA & AOA are drawn in consonance with provisions of the Sec. 25 & other applicable provisions of the Companies Act, 1956. 3 10 Make an application with to the Concerned Regional 8 working Director for issue of license under Section 25 of the days Companies Act, 1956 with all the requisite enclosure as (depending upon the given under:preparation Three Copies of MOA & AOA of the proposed Company of A declaration confirming the application by CA / CS / documents, availability Advocate on prescribed Stamp Paper. of each of Three copies of list of names, descriptions, addresses & the occupation of the promoters as well as the members of promoters and Board of Directors of the proposed Company. publication A statement showing details of assets & liabilities of the of notice in newspaper) Association as on date with the application. An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure.

A statement giving brief description of work, if any, already done by the association. A statement specifying briefly the grounds on which the application is made. A declaration in prescribed form on non-judicial stamp paper by each person making an application. A letter of authority. Copy of notice pursuant to regulation 11 of the Companies Regulation, 1956. 4 Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies. 5 On receipt of the above papers, the RD gets the MOA & 30 take the decision for grant of license to the application or days not. 6 On receipt of the license from RD, file the necessary papers 8 The ROC on making necessary scrutiny and correction will days issue the certificate of incorporation. 10 45

AOA and other papers generally scrutinized, the RD will working

with ROC for registration along with filing fees & forms. working