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Section-25 Company

Section-25 company can be established U/S 25(1 )(a) and (b) of the Indian Companies Act, 1956,  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.

Section 25 Companies are formed as Public or Private Company having a limited liability under the Companies Act 1956. These companies can be formed with or without Share Capital, Section 25 Companies are not required to add the suffix Limited or Private Limited at the end of their name.

Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organizations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R)A regulations and the Home Ministry.

  • Main document: Memorandum and articles of association
  • Legislation: Registered U/S -25 of the Indian Companies Act 1956
  • Minimum 2 Shareholders & Minimum 2 Directors (for Private Limited Co.) – Directors and shareholders can be same person.
  • 7 Shareholders & 3 Directors (for Public Limited Co.) – Directors and shareholders can be same person

 

Incorporation process for Non Profit organization U/S 25 ROC

  • Application for Director Identification number (DIN)
  • Application for  Digital Signature certificate (DSC)
  • Preparation & searching of main objectives as well as availability of names
  • Apply for name approval From 1A
  • Preparation of Memorandum of Association (MOA) & Articles of Association (AOA)
  • Publish notice (news paper) in local language of the district where the registered office is located and at least once in English  newspaper circulating in that district.
  • Filing of documents with Register
  • Application to Regional director for issuing the license – Form 24 A
  • Handling of objections if any found after the news paper publication
  • Issue of license by regional director
  • Filing of license, incorporation certificate, Payment of registration fees with ROC.
  • Certificate of incorporation.

 

Advantages of Section-25 company

  • Recognized under various scheme operated by both central and state government
  • Recognized under Foreign contribution regulation act easy receive foreign contribution and funds
  • Separate legal entity , company and person who is associated are separate entity
  • Avail the income tax benefits recognized under tax laws
  • Easy transferable of ownership
  • Perpetual succession
  • Can start without any paid-up capital
  • Tax benefits to the donors U/S 80G of the income tax