While registration of Societies is not mandatory, it does bestow some credible benefits to ones that undergo the process of registration under the Society Registration Act of 1960.
Overview
A society is a collective of individuals living together, an organization, or a club, primarily engaged in philanthropic activities. Societies focus on a range of activities, including but not limited to education, sports, music, art, culture, literature, religion, and related genres.
The regulation of these societies falls under the purview of the Society Registration Act of 1860. This legislation not only governs the activities but also delineates the process and requirements for the registration of a society.
Registering a Society in India
Eligibility
To register a society in India, the Society Registration Act of 1860 stipulates a minimum requirement of 7 members. Unlike imposing restrictions based on nationality, the Act is inclusive, allowing not only Indian citizens but also corporations, foreign citizens, and other registered societies to be part of the registered society.
Advantages of Registration
While the Act does not make registration mandatory, opting for registration provides several advantages. A registered society attains legal recognition, establishing itself as a distinct entity. This recognition enables the society to engage in property transactions—such as purchasing, holding, or selling—and grants it the legal capacity to initiate or defend legal proceedings.
Nodal Authority
The responsibility of society registration lies with the respective state governments. The application for registration must be directed to the authority designated by the state where the registered office is located.
Pre-Registration Formalities
Prior to registration, society members must unanimously agree on a unique name for the society, avoiding any resemblance to existing society names.
Subsequently, members are required to formulate the Memorandum of Association and the Rules and Regulations of the society as part of the registration process.
Merits of Getting a Society Registered in India
While the registration of societies in India is not mandatory, it is strongly recommended due to the array of benefits it offers:
- Legal Recognition and Separate Entity: A registered society attains legal recognition, establishing itself as a distinct legal entity.
- Property Rights: Registered societies gain the ability to engage in property transactions, including selling, holding, acquiring, leasing, and renting. Compliance requirements are simplified when property is held in the society’s name, and there are no legal complexities during ownership transfers.
- Legal Proceedings: Registered societies have the right to initiate legal proceedings in court when necessary.
- Tax Exemptions: Upon registration, societies become eligible for tax exemptions, subject to holding an 80G certificate from the Income Tax authorities.
- Continuity of Entity: A registered society maintains its status as a separate legal entity regardless of changes in membership.
- Member Liability: Members are not personally liable for the society’s debts and liabilities, except in cases of deliberate fraudulent actions, where members can be held responsible.
- Bank Account Privileges: Registered societies can hold accounts in authorized banks in their own names.
- Fund Accumulation: Registered societies have the privilege to collect and accumulate funds from external sources.
An unregistered society lacks the status of a separate legal entity, thus foregoing the mentioned advantages. In cases where a society is managed by foreign citizens but operates in India, it is considered an Indian society, subject to Indian laws.
Procedure for Registration of Cooperative Society
The process for registering a cooperative society involves the following steps:
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Selection of State
Members need to choose the state in which the society will be registered and follow the registration procedures according to the respective state laws.
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Name and Objectives
Members must decide on a suitable name for the society and draft its objectives.
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Memorandum of Association (MOA)
Legal assistance may be sought to draft the Society’s Memorandum of Association (MoA).
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Covering Letter
A formal requisition for registration, in the form of a cover letter, should be submitted.
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Affidavit
An affidavit outlining the relationship between the members is required.
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Notary Public Witness
Members must affix their signatures in the MoA under the witness of a Notary Public.
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Rules and Regulations
The Society’s Rules and Regulations must be signed by at least three members of the governing board.
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Submission to Registrar
The MoA, Rules and Regulations, along with other mandatory documents, must be submitted to the Registrar of Societies or an authorized state official.
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Verification
After verifying the documents, the Registrar can either approve or reject the application or request additional details if necessary.
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Certified Copies
Certified copies of the submitted documents serve as the initial evidence of the society’s registration.
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Approval by Local Bodies
If local bodies are satisfied with the accuracy of the records submitted, registration is granted.
Disadvantages of an Unregistered Society
- A Society that is not registered under the Societies Registration Act, of 1860 is not considered a separate legal entity
- An unregistered Society does not have the right to sue another party or to initiate legal proceedings in court to settle legal disputes
- Tax exemptions under the Income Tax Act, of 1961 are not available to unregistered Societies
- Unregistered Societies do have much credibility and are often viewed as an immaterial entity
- Shifting of ownership and transfer of property becomes challenging in the case of unregistered Societies.
The Takeaway
Although, registration of Societies is a little cumbersome and involves tedious paperwork, going through the ordeal is worth it beyond doubt. To get your society registered and at the same time, escape the agony of going through mountains of paperwork and documentation, outsource the work and let the professionals at Vakilsearch handle it.
We at Vakilsearch are home to best-in-class experts who can handle the registration of Societies with utmost care. To know more, reach out to us today!
