A Non-Profit Company can be formed for any non-profit activity. It is identical to an ordinary company in all respects except that it is not established for profit and commercial gain. It is also called a Non Profit Company and is a voluntary association of people, registered under the Indian Companies Act. The accountability aspect of a non-profit company because of statutory disclosure requirements is a relevant advantage of a company’s operational transparency and ability to invoke and maintain public faith.
Objectives of a Non-profit company
Objectives of a non-profit company can be including promotion of commerce, art, science, religion, charity or any other useful object. Profits are applied for promoting only the objects of the company and no dividend is paid to its members. A non-profit company may be Public or Private. If the non-profit company is a private company, minimum of only two members are required to form it. However, if the non-profit form is for a public purpose, then a minimum of seven are needed. A non-profit company’ and is eligible for certain exemption from provisions of law and concessional rate of fees etc..
All companies having limited liability are required to use the term ‘limited’ or ‘private limited’. But in the case of non-profit companies are allowed to dispense with the use of term ‘limited’ or ‘private limited’ from their names.
The Income Tax Act applicable in India defines ‘Charitable Purpose’ to relief of the poor; education, medical relief etc are general public utility. A purpose related to worship or religious teachings is not as charitable purpose. A public charitable purpose has to benefit a large section of public as distinguished from specified individuals. Whether a Trust, Society or Non Profit company, the Income Tax Act treats them equally in terms of exempting their income and granting 8oG certificate.
Steps for establishing a section Non Profit Company
- Application for a name
- Application to Regional Director
- Filing of Application copy to the RoC
- Preparation of Memorandum and Articles
- Registration under Section 80G
- License under non-profit company
- Registration with ROC