While the registration of Societies is definitely not mandatory, the process does bestow some credible benefits to the ones that undergo the process of registration under the Society Registration Act, 1960. The state governments in India, have adopted the Act and have made minor amendments as per their requirements.
Benefits of Society Registration: A Society is a collection of individuals that cohabitate together, an organisation or a club, wherein the members deal with philanthropic activities predominantly. The Societies concentrate on activities such as education, sports, music, art, culture, literature, religion, and other related genres.
The activities of such Societies are regulated by the Society Registration Act 1860. The Act also lays out the procedure and the prerequisites for getting a Society registered. The state governments have adopted the Act, by making a few necessary amendments.
Registering a Society in India
The Society Registration Act, 1860 mandates that there should be a minimum of 7 members to get a Society registered. The Act does not hold any reservations purely for Indian citizens but extends its ambit to corporates, foreign citizens, and also to other registered Societies. Further, the Act does not mandate the registration of Societies. Just like a partnership firm, Societies can be registered or unregistered.
Yet, the registration of Societies does fetch them some solid benefits which otherwise would be unavailable. For instance, a registered Society is bestowed with legal recognition and hence can be acknowledged as a separate entity. Such Societies can purchase, hold or sell properties and also have the legal capacity to sue or be sued.
The registration of Societies is taken care of by the respective State governments. Therefore, the application for registration must be addressed to the authority empowered by the State in which the registered office is situated. It is mandatory that the members of the Society must first agree upon the name of the Society Registration, which should be unique and not bear any similarities to the names of the existing Societies. Thereafter, the members should draft the Memorandum of Association and the Rules and Regulations of the Society before proceeding with the registration.
Merits of Getting a Society Registered in India
Although the registration of a Societies is not compulsory, it is urged that these forums get legally registered in order to reap the following benefits:
- Society gets legal recognition and is considered to be a separate legal entity
- The Society, after registration, gains the ability to sell, hold, acquire, lease, and rent a property. The compliance requirements are less complex when a registered Society holds property in its own name. Further, there are no legal hassles when there is a transfer of ownership in the property
- A registered Society has the right to impose legal proceedings in court when the need arises
- On registration, the Society becomes eligible for tax exemptions, provided it has the 80G certificate from the Income Tax authorities
- Regardless of the change in the membership, the Society, once registered, always remains a separate legal entity
- Members are not liable for the debts and liabilities of the Society. But in case of deliberate fraudulent actions on behalf of the members, they will be held responsible for the same
- A registered Society can hold an account in an authorized bank in its own name
- A registered Society has the privilege to collect and accumulate funds from external sources.
An unregistered Society is not given the status of a separate legal entity and hence such Societies won’t have the privilege to experience the advantages stated above. When a Society is managed by foreign citizens but is operated in India, it would be considered an Indian Society, and the Indian laws will be applicable to it.
Procedure for Registration of Cooperative Society
- The members must first choose the state in which the Society is going to be registered and have to carry out the registration procedures as per the respective State law
- The members must then decide on a suitable name and then draft the objectives of the Society
- They can seek the help of a legal practitioner to draft the Society’s Memorandum of Association (MoA)
- A covering letter, which acts as the formal requisition for registration should be submitted
- An affidavit delineating the relationship between the members is to be furnished
- It is of crucial importance that the members of the Society affix their signatures in the MoA under the witness of a Notary Public
- Further, the Society’s Rules and Regulations must be signed by at least 3 members of the governing board
- The MoA, the Rules and Regulations document, along with the other mandatory documents must be furnished with the Registrar of Societies or any other official authorised by the state
- After verifying the documents, the Registrar can either approve or reject the application or can request additional details if required
- The certified copies of the said documents serve as the initial evidence of registration of the Society
- If the local bodies are satisfied with the accuracy of records thus submitted, the registration is granted.
Disadvantages of an Unregistered Society
- A Society that is not registered under the Societies Registration Act, 1860 is not considered a separate legal entity
- An unregistered Society does not have the right to sue another party or to enforce legal proceedings in court for settling legal disputes
- Tax exemptions under the Income Tax Act, 1961 are not available to unregistered Societies
- Unregistered Societies do not attract much credibility from the public and are often viewed as an immaterial entity
- Shifting of ownership and transfer of property becomes challenging in the case of unregistered Societies.
Although, registration of Societies is a little cumbersome and involves strenuous paperwork, going through the ordeal is worth it beyond doubt. To get it registered and at the same time, to escape the agony of going through the paperwork and documentation, the only way out is to outsource the work and let the professionals handle it.
We at Vakilsearch have the best-in-class experts who can handle the registration of Societies with utmost care. Our team can make the entire process look like an absolute cakewalk, despite the voluminous procedures involved. Make note! We are just a phone call away and will be obliged to help with the registration of Societies.
- Important Information Regarding the Beginning Stages of Society
- What is the Societies Registration Act?
- Documents Required For Society Registration