In April 2009 the Companies Act No. 71 of 2008 was promulgated and replaces the 35-year-old Companies Act No. 61 of 1973. The passing of this Act is the result of a lengthy and rigorous legislative review process that involved widespread public participation. For the purpose of this fact sheet, we will refer to the Companies Act No. 71 of 2008 as “the new Companies Act” and the Companies Act No. 61 of 1973 as the “old Companies Act. The new Companies Act comes into force on a date to be determined by the President.
The purpose of this fact sheet is to provide information for non-profit organizations (NPOs) on how the new Companies Act affects them and how it differs from the old Companies Act.
It is not intended to deal exhaustively with the implications of the new legislation, rather make known the key implications it will have for non-profit entities.
non-profit organization
The old Companies Act was characterized by complicated and highly bureaucratic registration requirements. These often resulted in NPOs contracting external consultants to assist with the technicalities of the registration process.
The new Companies Act simplifies the registration process and this aims to increase accessibility to form enterprises and non-profit organizations. Whether this goal is achieved will only become apparent once the Act’s regulations are in place.
In India, non-profit/ public charitable organisations can be registered as trusts, societies, or a private limited non-profit company, under section-25 companies. Non-profit organizations in India
(1) exist independently of the state;
(2) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity;
(3) produce benefits for others, generally outside the membership of the organization; and
(4), is ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.
(5) A license may be granted by the Central Government section on such conditions and subject to such rfit, and those conditions and regulations shall be to which the license is granted, and where the section (I), shall if the Central Government so directs. memorandum, or in the articles, or partly in the one other.
(6) It shall not be necessary for a body to which granted to use the word “Limited” or the words any part of its name and unless its articles otherwise body shall, if the Central Government by general or s:e:::3U directs and to the extent specified in the direction, be of the provisions of this Act as may be specified .
(7) The license may at any time be revoked – Government, and upon revocation, the Registrar shall “Limited” or the words “Private Limited” at the end the register of the body or section 80 g registration to which it was granted; a cease to enjoy the exemption granted by this section provided that, before a licence is so revoked; Government shall give notice in writing of its intention shall afford it an opportunity of being heard in revocation.
(8) (a) A body in respect of which a license under force shall not alter the provisions of its memorandum its objects except with the previous approval of the signified in writing.
(b) The Central Government may revoke the license if it contravenes the provisions of clause (a).
(c) In according the approval referred to in clause z Government may vary the license by making it conditions and regulations as that Government thinks in addition to, the conditions and regulations, if are license was formerly subject. ngo registration is its another process.
(d) Where the alteration proposed in the memorandum of a body under this sub-section is wiz; objects of the body so far as may be required to enable c the things specified in clauses (a) to (g) of sub-section the provisions of this subsection shall be in addition derogation of, the provisions of that section.
