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Difference between Trust, Society & section 8 Company

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The popular forms of NGO’s in India are Trust, Society and section 8 Company. All are associations of persons, gathered for a motive, for their mutual benefit All three types are governed by different laws and formed for the benefits of its members or people covered by the by-law. The basic difference between these three forms are under

Basis of Difference Trust Society Section 8 Company
Statute/ LegislationTrusts governed by the Indian Trust Act, 1882.Societies are governed by the Societies Registration Act 1860, which is an all- India Act. Many states, however, have variants on the Act.Section 8 Companies are governed by the Indian Companies Act, 2013.
JurisdictionSub Registrar Office having jurisdiction over the registered officeRegistrar of SocitiesThe power to register a section 8 Company lies in the hand of Regional Director & Registrar of Companies of concerned state.
Registration DocumentFor Registration of Trust main instrument is Trust deed.For Registration of society main instrument is Memorandum of Association and rules & regulations.For registration of section 8Company main instrument is Memorandum and Articles of Association.
Stamp DutyAround 8% including fees, based on corpus fundBased on CapitalRs 3025
Members RequiredAt least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity.Minimum: – Seven members are required for formation of state level society. – Eight members required from separate states for formation of national level society.Minimum 2 for a private company and 7 for a public ltd company
Board of ManagementTrusts are governed by their trustees or by board of trustees.Societies are usually managed by a governing council or managing committee.It is managed by the board of directors.
Legal TitleLegal title of the property of a trust vests in the hands of trustees.In a society, all properties are held in the name of the society.In section 8 Company, all properties are held in the name of Company.
Revocable/ IrrevocableIndian public charitable trusts are generally irrevocable.Societies may be dissolved. Dissolution must be approved by at least three-fifths of the society’s members.A section 8 Company may be dissolved.
In case of inactivenessIf a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres, meaning “as near as possible,” may be applied to change the objects of the trust. Thus, it appears that grantors can feel fairly secure that the charitable nature of a trust will be honored, even if the original, specific purposes of the trust cannot be carried out.Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 8 Company, preferably one having similar objects as the dissolved entity.
Annual ComplianceThere is no requirement of annual return filing.Societies must file annually, with the Registrar of Societies, a list of the names, addresses and occupations of their managing committee members.There is requirement of annual compliance by filing of annual accounts and return of company with the RoC.
Time Period involved in registration/ formation2-5 days5-10 days30 days
Cost factor Visit www.biswasfiling.com Visit www.biswasfiling.com Visit www.biswasfiling.com
Registration with Income Tax u/s. 12A & 80G as NGOAt par with society & Section 8 Company.At par with trust & Section 8 Company.At par with trust & Society.
Registration with Income Tax u/s. 12A & 80G as NGOPossibleLess preferredPossible
From the point of view of Foreign Contribution Regulation Act, (FCRA) registrationPossibleLess preferredPossible
Transparency in workingLowHighHigh as everything is available online.
Change in board of directors/ trustees MembersEasy Through a democratic wayEasy


Gayatri Dhote

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