There are several important things you must know if you're establishing a society. Read on to know how a society registered under the Societies Registration Act gets multiple benefits.
Introduction
The concept of a society, where like-minded individuals come together to pursue common goals or charitable activities, is deeply ingrained in our social fabric. To ensure the smooth functioning and legal recognition of these societies, registering under the Societies Registration Act becomes crucial.
This guide serves as a roadmap, shedding light on the Societies Registration Act of 1860, the benefits of registration, the registration process, required documents, and the legal implications societies may face in the Corporate Insolvency Resolution Process.
Whether embarking on the journey of society registration or dealing with legal intricacies, seeking professional assistance, such as that provided by Vakilsearch, ensures a smooth and legally compliant experience.
Societies Registration Act of 1860: An Overview
The Societies Registration Act of 1860, a pivotal piece of legislation, regulates the functioning of societies in India. Although registration under this act is not mandatory, it offers a plethora of benefits, making it highly advisable. The primary objectives of the act include:
- Promotion of Art, Science, literature, or any other topic the society aims to advance.
- Imparting practical knowledge.
- Supporting the needy, particularly in the case of charitable societies.
- Creating funds for orphans.
This act, operational since May 1860, provides a governing body to oversee the activities of societies. While not compulsory, society registration under this act is encouraged as it unlocks legal procedures and benefits exclusively available to registered societies. Registration facilitates transactions such as buying, selling, or suing, and it is managed by state governments.
Society Registration: Benefits and Prerequisites
Registering a society under the Societies Registration Act of 1860 offers a range of advantages, making it a viable option. The key benefits include:
- Legal Entity Status: A registered society attains legal entity status, distinct from its members.
- Property Transactions: Registered societies can engage in property-related activities such as buying, selling, or renting.
- Contractual Engagements: Only registered societies are permitted to enter into contracts and borrow money from banks.
- Limited Liability: In the case of society debt, no single member is individually held accountable.
- Tax Benefits: Registered societies enjoy multiple tax benefits.
For a society to qualify for registration, it must have a minimum of seven members, who can be citizens of India or foreigners.
Documents Required for Society Registration
To initiate the registration process for a society, certain essential documents must be submitted. These include:
- Cover Letter: A letter from founding members requisitioning the registration of the society.
- Memorandum Copy: A duplicate copy of the Memorandum of Society.
- Rules and Regulations Document: A duplicate copy of the document outlining all the rules and regulations of the society.
- Registered Office Address Proof: Proof of the society’s registered office address.
- No Objection Certificate (NOC): If the registered office is a rented property, an NOC from the landlord.
- Affidavit: An affidavit from the president or secretary explaining the relationship among society members.
Once the application and required documents, along with the fees, are submitted to the registrar, the society undergoes scrutiny and, if approved, is registered.
Corporate Insolvency Resolution Process (CIRP)
Moving beyond society registration, it is essential to understand the Corporate Insolvency Resolution Process (CIRP). When an individual, known as a corporate debtor, defaults on a debt, CIRP can be initiated under the Insolvency and Bankruptcy Code of 2016. The corporate person, whether a company, limited liability partnership, or an individual with limited liability, can face CIRP if it defaults.
It is often advised that the societies formed must register under the Societies Registration Act of 1860 as the societies registered under the Societies Registration Act get multiple benefits including tax exemptions.
Societies in CIRP: Legal Implications
Societies can find themselves entangled in the Corporate Insolvency Resolution Process under certain circumstances. If a society, registered under the Societies Registration Act of 1860 with seven or more members, has a member bound to pay a debt, legal actions may be pursued in the event of a default. In such cases, an individual, as per society’s rules, obligated to pay a debt or arrear, may face legal consequences under the act.
Conclusion
Navigating the legal landscape of society registration and its implications, including the Corporate Insolvency Resolution Process, requires a comprehensive understanding of the relevant laws. Unlocking the potential of society registration is not just a legal formality; it’s a strategic move toward fostering the common goals and objectives of a group of individuals coming together for a greater purpose.
For those seeking assistance in registering a society under the Societies Registration Act in India, Vakilsearch offers a convenient online service. Legal experts from Vakilsearch guide individuals through the registration process. By visiting the website, providing necessary details, and engaging with a legal expert, the journey to society registration becomes seamless.
