Setting up a Non-Profit Organisation in IndiaMarch 23, 2023
If you are a Non-Profit Organisation (NPO) looking to step operations in the Indian market, you might notice that the process to register your company might be a little different than in your home country.
For foreign companies looking to extend their nonprofit efforts to India, there are three ways they can register their NPOs in India:
- as a Trust (which has no central law),
- as a Society (which follows legal structure depending on the state), and
- as a Section 8 company (which follows the Companies Act, 2013).
The process of registering an NPO might differ on which option you choose. For example, to incorporate as a charitable trust, you need to submit the trust deed with the official having jurisdiction in the state you are located in. While registering as a society, you need to submit the application with a Memorandum of Association with the registrar of societies of the state.
Out of the three options, a Section 8 company is the most ideal for international investors. Section 8 companies are more strictly regulated but are also highly recognised. But what does being a Section 8 mean?
A Section 8 company is a company that promotes arts, commerce, charity, etc. and uses its earnings to promote these objectives. They cannot use this profit to pay dividends, only to further their charitable motives.
Steps to register as a Section 8 company in India:
- Obtain a Digital Signature Certificate (DSC) from the company’s board of directors. To get a DSC, you must provide proof of identity and address. After that, submit Form DIR-3 to acquire a Director Identification Number (DIN) from the Registrar Of Companies (ROC).
- The ROC will assign a DIN to the directors once the form DIR-3 is approved.
- Next step is to get a licence. To apply, submit Form INC-12 to the ROC, along with the correct documents, like NOC, address proof (bills, bank statement), Identity proof (voter ID, Passport), etc.
- Form INC-16 will be issued with a licence under Section 8 once INC-12 is approved by the ROC.
- After getting your licence, file the SPICe+ Form for incorporation.
Once all the forms are given the green light, the ROC will issue a Certificate of Incorporation accompanied by a distinct Company Identification Number (CIN). And that’s it. Your NPO is incorporated as a section 8 company and can operate in India!
To foreign businesses looking to step into India, the processes might seem alien and may cause issues. That’s why, to make the process of incorporation, accounting and operations of foreign companies, Corporate Leaps helps you find the best possible strategy for your entry into India and helps you adhere to the rules and regulations of Indian business standards.