A society is usually formed for support and advancement a charitable cause such as culture, art, sports, education, religion, and so on. However, to properly register a society, one must adhere to a particular set of rules and procedures under The Society Registration Act. The Society Registration Act of 1860 was implemented to bring uniformity in the governance of Societies and to augment the legal stipulations that are associated with society registration. The act was accepted in all the states of India, some with amendments and some without amendments. A Society can be created and registered for several causes. Here are such similar purposes for which a society can be registered:
- Promotion of Science
- Promotion of Fine Arts
- Creation of Military Orphan Funds
- Social Welfare and Development
- Grant of Charitable Assistance
- Diffusion of political education
- Maintenance or foundation of galleries or public museum
- Collections of natural history
- Collections of mechanical and philosophical inventions, designs, or instruments
- Diffusion of Useful Knowledge
- Maintenance or foundation of reading rooms or libraries.
Membership Requirements for a Society
Before dealing with the procedure for registering a society, one must be aware of the minimum number of members required for a society to be successfully registered as well as the eligibility of the individuals that want to become a member. A society must have at least seven members. To form a society at National level, it must comprise of at least eight members from different states working as promoters for the society.
The names of individuals who wish to be a member of the society have to be subscribed to the Memorandum of association. In order to be eligible for becoming a member in any society, the person must be above the age of 18 years, mentally sound as well as be competent enough to contract under the Indian Contract Act, 1872. Apart from individuals from India, foreigners, companies, and other registered societies can register for the Memorandum of association of the society as well.
Procedure for Society Registration
There are certain steps that a society has to follow and certain documents to submit in order to get registered. Here are the steps to register a society under the Society Registration Act,1860:
Step 1: Select a Unique Name for the Society
The first step for the registration of any society is the selection of a unique name for itself. The Society Registration Act does not permit the usage of identical or similar names as the existing societies. Apart from this, the name proposed for the society must not suggest any patronage by any state government or the Government of India. Furthermore, the suggested name should not be under the list of restricted or prohibited names adhering to the provisions of the Emblems and Names Act of 1950. For instance, if a society chooses their name as ‘Cultural Society of the Government of India’, then their registration will be rejected as the name suggests the patronage of the Government of India. Thus, a society cannot have a name which can mislead people into thinking that the particular society is officially acknowledged and promoted by the Government.
In case of a society trying to get registered on a national level, a promoter of the society must apply to the registrar with the name as well as three alternatives to the name in case a registered society already exists with the same name as the preferred name.
Step 2: Prepare the Memorandum of Association
The Memorandum of association must be signed by each and every founding member of any society. The signing must be witnessed and officially stamped by the Notary Public, Oath Commissioner, Advocate, Gazette Officer, a First Class Magistrate or a Chartered Accountant. The documents can either typed or printed or even written on plain paper. The Memorandum must contain a table all the names of the members of the society who are going to form the General Body along with their addresses, designations, occupations and signatures. It must also contain a table with the names and signatures of the members that are going to form the executive body of the society, that is, the President, the Treasurer, the General Secretary, the Vice President, the Joint Secretary, and other members of the body. The executive body or the governing body of the society controls all the functions of society. These members are only elected for a specific period of time and can be re-elected by the embers during the society elections.
Clauses of the Memorandum
The Memorandum consists of several clauses that must be included in every society’s Memorandum of association. The clauses are:
- Name Clause
- Registered Office Clause
- General Body Member Clause and their List
- Objective Clause
- Executive Body or Governing Body Members Clause and their List
Step 3: Prepare Rules and Regulations
Rules and Regulations, which will govern the working of the society and maintain the day to day activities, have to be prepared as well. Three office-bearers, that is, the Chairman, the President, and the Vice President has to certify this document at the end of each of its page. The rules and regulations document will contain all information about the rules for taking membership of the society, information about the auditors and how often the society will hold meetings and what they will discuss in them. The rules and regulation document must also contain the forms of arbitration in case members of the society encounter any dispute. It should also contain the ways that the society can be dissolved.
Clause of the Rules and Regulations
If society wants to be registered, they must include all the following clauses in their rules and regulations document:
- Membership Clause
- Subscription Clause
- Meeting Clause
- Governing Body of Committee Clause
- Legal Procedure of Arbitration
- Procedure for Dissolution of the Society
Changing of Rules and Regulations
Once the Rules and Regulations have been formed, they can be changed as per the desire of the society. To change the rules and regulations of any society, a new set of rules have to be formed, and the President of the society along with the Chairman, the Vice President, and the Secretary of the Society have to sign them.
Step 4: Other Documents Required for Registration of a Society
Apart from the Memorandum of association and the rules and regulations, here are some other documents that are necessary to submit to complete the registration procedure:
- PAN Card of every member of the society along with their applications.
- A residence proof must be submitted of all the members of the society. Bank Statement, Utility Bill, Adhaar Card, Passport, and Driving License, any of these documents can be used as valid address proof.
- A copy of the proof of address where the registered office of the society will be situated is required.
- A No Objection Certificate or NOC by the landlord of the address of the registered office must be attached as well.
- A covering letter at the beginning of the application has to be attached. The letter must include the society’s purpose or the objective and must appeal for registration of the society. All the founding member or members of the society must sign the cover letter.
- A separate list of all the members with their respective signatures must be given.
- And lastly, the application for registration must contain a declaration y the President of the society stating that they will be competent in their workings and is willing to hold the post as the President of the society.
Step 5: Submission of All The Documents
Once all the documents are compiled and duly checked, they have to be submitted to the registrar along with the requisite fees. Usually, the fees is at least INR 50 or more. Two copies of each document must be submitted to the registrar. One copy of the documents will be signed by the registrar as a form of acknowledgement and will be returned to the members. The second copy will be kept by the registrar for approval. Once all the documents are properly vetted out and verified, the registrar will issue an Incorporation Certificate with a registration number allotted to it. The rules and regulations as well as the Memorandum of association, must be filed with the concerned registrar that belongs to the particular state where the society is located. Once the registrar is satisfied with society registration application, they will certify that the society has been registered. It usually takes at least a month for the whole process of approval by the registrar and the consequent registration of the society.
If all the steps given above is followed, then the registration of a society is quite a hassle-free process. Registering a society has several advantages as well as limitations integrated with it.
Advantages of Registering a Society
When you form a society and register it, you get certain advantages for doing so:
1. A registered society is seen as a separate legal identity.
2. Once a society has been registered, they have the right to sell, lease, buy and rent any property without any kind of legal hassles. However, no member of the society has any kind of personal right to any of the assets or properties of the society. A registered society can also enter contracts as well as borrow and lend money with its own name.
3. A registered society working under the act is allowed to file for tax return and thus avail the tax exemption.
4. A registered society is always seen as a separate entity even if the membership status of the society changes.
5. A registered society can protect its properties against any opponent who are seeking the ownership of those properties.
6. Once a society is registered, it can bypass all the provisions that are associated with opening a bank account in its own name.
7. No particular members of a registered society can be held liable for the debts, obligations, or any kind of contracts of the society unless:
- The obligations or debts are incurred as a result of activities that have been undertaken in order to gain money for fiscal profit. In such a case, each and every member of the society who were involved in the obligation is personally liable for it.
- The obligations and debts are sustained through illegal and unlawful activities. In such a case, each and every member of the society who was involved in the obligation is personally liable for it as well.
8. A registered society is allowed to freely accumulate funds from any outside sources other than the immediate members of the society.
9. Registered Societies are allowed to enforce legal proceedings in case a case is filed against the defaulter or in case any dispute arises.
If the society is not registered, they have to forgo many of the above advantages. They are not seen as a separate legal entity and have no right to enforce any legal proceedings in the court. As mentioned under the Income Tax Act, unregistered societies cannot avail tax exemptions.
Limitations of a Society
Similar to the advantages faced by registered societies, there are certain limitations to them as well. Here are some of the limitations of forming and registering a society:
1. Tax exemptions of societies are only limited to the public trust funds and only if the Income Tax department accepts the activities of the trust as charitable.
2. For commercial investors who are interested in microfinance, societies are less appealing to them as there is no system of an equity investment or ownership in a particular society.
3. Societies, whether registered or unregistered, are vulnerable to the implications of money lenders or the acts of various state governments.
A registered society enjoys several perks and advantages that an unregistered society cannot. Furthermore, unregistered societies are more vulnerable to dissolution than registered ones. Registration of a society under the Society Registration Act of 1860 has lesser compliance, lesser liabilities, and is way more resilient in terms of the operations of the particular society.