Contenu connexe Similaire à Section 25 Presentation by Mitesh Agrawal (20) Plus de Net Impact Pune Professional Chapter (20) Section 25 Presentation by Mitesh Agrawal1. Sarva Sakshar Foundation
– A Section 25 Company
Eradicating illiteracy through innovative solutions
Mitesh Agrawal
Chief Literacy Officer
Sarva Sakshar Foundation, Pune
www.sakshar.in
Email: contact@sakshar.in
3. www.nipune.org
What is What? And Who is Who?
Item Meaning Title Meaning
The Companies Governs the constitution/ formation of a Shareholder/ member Who owns a share in the company
Act company
Who has founded/ established the
Founder
company. Mostly own shares too
A legal entity, can be prosecuted under the
Company
law of the land
Promoter Who promotes a company, can change
License to dispense with word ‘Limited’ as a Director Agent of shareholders
Section 25 recognition/ acknowledgment of not-for-profit
status Board of Directors Committee of Directors Supervising the
(BOD) Management
Shares/ Equity Share in the ownership of the company
Management/ Running the Day-to-Day operations of the
Employees company
Represents % ownership; calculated by
Stake
dividing your # of shares by total # of shares Company
Details the objective and means of
Memorandum of
conducting the business, i.e. primary and
Association
secondary activities
Articles of Details how the business to be run, Power of
Association Board, General Meeting etc.
Shareholders BOD Management Employees
Copyright © 2012 Sarva Sakshar Foundation -3-
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Why section 25? - benefits
If you are making impact 365 days a year, then section 25 registration is for you
With higher compliance (i.e. cost of doing business) as compared to other structures, section 25 offers you:
More transparency with higher compliance, annual filling of information which is publically avaialble
Easier to induct (and remove) influential personalities as board members without loosing control
Control is based on equity percentage unike trustee have equal powers
Concentrated control or shared control Exemptions over a normal For-Profit
Lower registration fees and exemption from stamp duty
Raise funds from Banks
Maintain book of accounts only for 4 years Vs 8 years
Social fund – investments
Company secretary's qualifications are not mandatory
Relaxed norms compared to a for-profit comany
No need to extensively publish name and reg. address
15% of your income is exempt from income tax
Flexibility with respect to date, time and venue of an AGM
Donors get 50% or 100% exemption from tax
No need to notify change in directors
No prior permission required to increase number of directors
Only 2 mandatory board meetings Vs 4 meetings
Exempt from CARO 2003
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What it takes away from you?
I, the Regional Director at Bombay/Calcutta/Kanpur/Madras, hereby grant this license, directing that the said
association be registered as a company with limited liability without the addition of the word "Limited" or the words "Private
Limited" to its name, subject to the following conditions, namely :-
Prohibit the payment of any dividend to its members
No remuneration shall be given by the company to persons who at any time are or have been members
No alteration shall be made to the MoA or to the AoA without prior written approval
Other insertions in MoA and AoA as the ROC/ RD deem fit
With foreign nationals as shareholders, additional considerations like FIPB/ FDI/ FEMA compliance will be required
What’s allowed
Remuneration only after previous approval of Central Government – granted only in exceptional cases
Payment of out-of pocket expenses
Reasonable and proper interest on money lent
Reasonable and proper rent on premises let to the company
Income tax act requirements
− Market salary for a defined set of relatives of members
− Other market value based payments for all the buy-sell-lease transactions with members and relatives
Note: Central Government in this context means the Registrar of Companies (ROC) or Regional Director (RD) who has jurisdiction over your company
Copyright © 2012 Sarva Sakshar Foundation -5-
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Time –line, documents and steps required to form a new company u/s 25
Application for license
1 Month 1 Month 1.5 Months
Identify right experts and Plan a suitable structure Submit the documents to get the section 25
advisors Apply for Name approval license
Research and understand the − Takes 3-5 days With-in a week, publish advertisement
laws − Valid only for 60 days − 2 news papers – one English and one regional
Digital Signature Certificate Finalise shareholding − Wait for any objections for next 30 days
(DSC) Preparing legal documents No objection, then
Director Identification Number required for registration Apply for Corporate Identity Number (CIN)
(DIN) Takes another 5 days
MoA and AoA
A declaration by a practicing Company Secretary
An estimate of the future annual income and expenditure of the proposed
company, specifying the sources of the income and the objects of the expenditure
A statement giving a brief description of the work proposed to be done
A statement specifying briefly the grounds on which the application is made
A declaration by each person making the application in the form
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Section 25 Vs Trust Vs Society
Section 25 Company (Pvt Ltd) Public Trust Society
Public Trust Act like Bombay Public Trust
Statute/Legislation Companies Act of 1956 Societies Registration Act of 1860
Act, 1950
Ease of Formation Relatively complicated, 2-3 months Very simple, 2-3 weeks Relatively simple, 1-2 weeks
Cost of registration Rs. 35,000 Rs. 10,000 Rs. 5,000
Separate application, strict
Name Approval Not required No separate application
guidelines for names approval
Jurisdiction of the Act Concerned state where registered Concerned state where registered Concerned state where registered
Authority Registrar of Companies Charity Commissioner/Deputy Registrar Registrar of Societies
As Society (and by default also as Trust
Registration As Section 25 Company As Trust
in Maharashtra and Gujarat)
Memorandum and Articles of Memorandum of Association and Rules &
Main Document Trust deed/ Indenture
Association. Regulations (Bye laws)
Number of persons Minimum two members and two
Minimum two trustees; no upper limit Minimum seven, no upper limit
needed to register directors; less than 50 members
2 tier: 2 tier:
One tier
Governing structure -General Body -General Body
-Trustees
-Board of Directors -Executive committee
Voting Rights Based on shareholding All trustees have equal rights All members have equal rights
Annual filing Annual return and audited accounts No filing List of managing body, varies by state
General & board
One and two every year No provision, as per deed/ indenture As per bye laws
meeting
Transfer of membership Yes No No
Recurring expenditure Some Nil Minimal
Area of operation Throughout India Throughout India Throughout India
Copyright © 2012 Sarva Sakshar Foundation -7-
Notes de l'éditeur FDI – sectoral capsMoA as per FIPBInclude FEMA prohibitions in MoASources:http://www.legalissuesforngos.org/main/company/faq.htmhttp://www.charteredaccountantdelhi.com/company%20formation%20steps.htmlhttp://www.caclubindia.com/experts/share-holding-by-foreign-national-100941.asp#.UBOcqpHCTkwhttp://pkpandya.com/index.php/component/content/article?id=70