This presentation compares different legal entities for undertaking charitable work in India: societies, trusts, and Section 8 companies. Trusts are the simplest to form but place responsibility on trustees, while societies are more flexible but the governing body has less independence. Section 8 companies offer more independence but are more complex and expensive to incorporate. Overall, a Section 8 company is recommended as the best option since it is perceived as more genuine and trusted by authorities, though trusts are best if keeping costs low is a priority.

1. Presentation On
DIFFERENT ENTITIES FOR UNDERTAKING
CHARITABLE WORK
BY:
CORPORATE LAW VERTICAL
ASIJA & ASSOCIATES LLP
CHARTERED ACCOUNTANTS

2. CONTENTS OF PRESENTATION
Legal Forms of Charitable Work
Society
Trusts
Section 8 Company
Comparative Analysis
Which is better?

3. LEGAL
FORMS
SOCIETY
SECTION 8
COMPANY
TRUST
LEGAL FORMS OF
CHARITABLE WORK
 NPOs in India
A. exist independently of the founding
entity;
B. are self-governed by a board of trustees
or managing committee/ governing
council, comprising individuals who
serve in a fiduciary capacity;
C. are for the “Charitable Purpose”, and
D. are ‘non-profit-making’, and are
prohibited from distributing profits (if
any) to their own members.

4. Legislation Societies are governed by Societies Registration Act,1860
General Purpose of
Establishment
Societies are membership organizations that may be registered for the
following purposes:
 Charitable purpose,
 Promotion of Science, Literature, Fine Arts,
 Promotion of education and
 Public Art Museums and Galleries
Main Instrument The main instrument of any society is the MOA and Rules & Regulations.
Members A Society needs a minimum of seven managing committee members;
there is no upper limit
Management Society is managed by a Governing Council or a Managing Committee.
Registration
MOA and Rules & Regulations should be registered with Registrar of
Societies.
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5. Legislation a) Different states in India have different Trusts Acts in force, for
governing the Trusts.
b) General principles of the Indian Trusts Act 1882 are applied in their
absence.
General Purpose of
Establishment
Public charitable trusts can be established for the following purposes:
 relief of poverty
 education
 medical relief
 provision of facilities for recreation, and
 any other object of general public utility.
Main Instrument Main Instrument is Trust Deed; where the objects and mode of
management are enshrined.
Trustees A trust needs a minimum of two trustees; there is no upper limit.
Management The management rests with the Board of Trustees
Registration of trust
deed
Trust deed should be registered.
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6. Legislation Sec 8 (not for profit) Company are governed by Indian Companies Act, 2013.
General Purpose of
Establishment
A Section-8 company can be established for promoting:
 Commerce,
 Art,
 Science,
 Religion,
 Charity or any other useful object
Main Instrument The main instrument of a Sec 8 Company is the MOA and AOA.
Members A Section-8 Company needs a minimum of three members; there is no upper limit.
Management Sec 8 companies are usually managed by Board of Directors/ Managing Committee.
Registration License to be obtained from the Regional Director to register a Sec 25 company and
MOA & AOA should be registered with Registrar of Companies.
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7. COMPARATIVE ANALYSIS
Particulars Registered Society Public Trust Sec. 8 Company Best
Formation 1 month 1 week 3-6 months Trust
Formation Costs Approx. Rs.10,000 Approx. Rs.5,000 Approx. Rs.50,000 Trust
Annual Costs Rs. 10,000 Rs. 2,000 Rs. 30,000 Trust
Members Seven + Two+ Two + Trust & Section 8
Company
Management Management
Committee
Board of Trustees Board of Directors Trust
Audit Requirement Required under
Income Tax Act
Required under
Income Tax Act
Required Under
Companies Act and
IT act
Trust and Society
Control Difficult Easy Easy Trust and Sec 8 Co.
Paperwork Moderate Very little High Trust

8. COMPARATIVE ANALYSIS
Particulars Registered Society Public Trust Sec. 8 Company Best
Public Transparency Moderate Low High Trust
Modifications Moderate Difficulty Very Difficult Moderate difficulty Society & Sec. 8 Co.
Area of Operation Usually Restricted to
state boundaries
Most of India All of India Sec. 8 Co.
Registration Process It is simple, but not as
simple as trust
Simple to register Complex Trust
Governing Law Societies Registration
Act or equivalent
state law
Common law in most
states
Companies Act, 2013
-
Voting Right Equal Voting Rights
to all members
Not Applicable Voting rights are
proportionate to the
share capital
Trust
Penalties under
governing law
Few None in most states Large number Trust

9. WHICH IS BETTER?
All three forms can be used for non-profit work. However, each form has its own
advantages and handicaps. Which form should you choose?
 Trust is the simplest of the three forms, but is too rigid as a legal structure for
management as it places onerous responsibility on the trustee(s) as to governance
 Society is more flexible than trust, but does not provide much independence to its
governing body in the context of decision making.
 A Sec 25 company offers more independence to its governing body, has more
credibility, but is complex.

10. Best for You
Based on your requirement and Future Plans Section 8 Company seems to be the Best
option though it is bit expensive and will take time to Incorporate. But being a
Corporate Body and Incorporated under Companies Act 2013, it is trusted more by
the authorities in India and Abroad and is perceived to be more genuine in its pursuit
of Social good.

11. For any Further Queries Clarification Contact
CS Manish Mishra
Asso. Director
Corporate Law Vertical
corporatelaws@asija.in
Partner In Charge- CAAshish Kapoor
(ashish.kapoor@asija.in)
Thank You….
Asija & Associates LLP
Chartered Accountants
Ph. no. : 0522- 4004652, 2205072