SETTING UP OF SECTION 25 COMPANY

1. SETTING UP OF SECTION 25 COMPANY

2. What are Section 25 Companies? • Section 25 Companies are those companies which are incorporated for promoting art, commerce, science, religion or any other charitable object. • Section 25 Company avails the same benefit as of trust and society which are established under different/ separate laws in India.

3. Basic Details of Section 25 Companies • Section 25 companies requires license granted by the central government recognizing them as such company. • These companies enjoys all advantages that other limited company registered under companies act requires. Apart from that, they also enjoy some other privileges too.

4. Benefits of Section 25 Company • 1. No minimum ShareCapital is required to register section 25 Companies. • 2. A general meeting can be called by giving a notice of not less than 14 days in writing. • 3. The period for preservation of books of account and other papers in case of section 25 companies is 4 years immediately preceding the current year. • 4. No need of Approval of Central Government for increase in number of directors beyond 12. • 5. Easy to regulate and operate as there are no interference of RD in day to day affairs of the company.

5. Obligations & Limitations on Section 25 Company 1. A Section 25 Company has to ensure that its profits and all other incomes are utilized only for the purpose of promoting its objects and not for any other purpose. 2. It should also ensure that its profits are not distributed as dividend its members. 3, Section 25 Company cannot alter its objects clause in its Memorandum without seeking the written approval of central government. 4, If an existing company obtains a license under section 25 it has to ensure that its objects are confined to those mentioned in section 25 itself and if not make proper alteration to its memorandum and articles.

6. Procedure: • Make application in form 1A to ROC for name approval. • Once the name is approved make an application to Regional Director for • granting license under section 25. • (3 ) Application should be accompanied by • (a) MOA and AOA • (b) Particulars about directors • (c) Declaration as per annexure V of the Companies Regulation Act, 1956.Form 32 • (d)The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

7. Time Duration It takes around 10-12 working days to complete the total incorporation process of Section 25 Company.

8. Dissolution • May be dissolve voluntarily…. • No surplus can be distributed amongst members post settling liabilities • 3. Surplus can be transferred to another Sec 25 Company preferably one having similar entity

9. Substitutes of Section 25 Company (1).Charitable Trust:- The public charitable trust is a possible form of not-for-profit. Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility.  Indian public trusts are generally irrevocable.  No national law governs public charitable trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.  (2).Societies:- Societies are membership organizations that may be registered for charitable purposes.  Societies are usually managed by a governing council or a managing committee.  Societies are governed by the Societies Registration Act 1860, which has been adapted by various states.  Unlike trusts, societies may be dissolved.    

10. INDIAN COMPANIES LAW: SECTION 25 COMPANY By: Vinay Gupta Partner, Vinaykgupta&.co https//Indianconsultant.co.in