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Non-Profit/Section 25 Company

Section 25 Company or a Non-Profit organization (NPO) is a Company established for promoting commerce, art, science, religion, charity or any other useful object, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

An NPO/NGO can be formed for promotion of any useful object like sports, education, research activities etc. The term No Profit does not mean that the Company cannot generate profit or income, but it essentially means applying the income for further promotion of the object and not for distributing it to the promoters. It means that the Company can earn profits but the promoters cannot be benefited out of those profits.

Key Benefits:

  • Many privileges and exemptions under Company Law.

  • Exemption from requirement of Minimum Paid-up capital.

  • Exemption of Stamp duty for registration.

  • Non-application of Companies Auditor’s Report Order (CARO) 2003.

  • Registered partnership firm can be a member in its own capacity.

  • Tax deductions to the donors of the Company u/s. 80G of the Income Tax Act.

Key Conditions:

  • Profit or Income of the Company shall be applied for the promotion of the main object

  • Declaration of dividend or distribution of profit to the promoters is not allowed

  • No member shall be appointed as a remunerated officer

  • No remuneration / benefit shall be paid to a member being a servant / officer of the Company (except reimbursement of out of pocket expenses, reasonable interest on money lent or reasonable rent on the premises)

  • Subsequent alteration of MoA & AoA requires prior approval of Central Govt. (i.e. ROC)

Key Requirements:

  • Minimum 2 Shareholders (for Private Ltd. Co.) and 7 Shareholders (for Public Ltd. Co.)

  • Minimum 2 Directors (for Private Limited Co.) and 3 Directors (for Public Limited Co.)

  • The directors and shareholders can be same person

  • DIN (Director Identification Number) for all the Directors

  • DSC (Digital Signature Certificate) for two of the Directors

Steps involved in Registration of Section 25 Company/ Non-Profit organization:

1 Preliminary Documentation Discussion between BMC Team & the Promoters of the Company:
  • Ascertaining document requirement and availability
  • Preparation of signing documents by BMC
  • Signing of the Incorporation documents by Promoters
  • Sending the Signed document by Promoters to BMC

(Varies by the response time taken by the Promoters)

2 DSC (Digital Signature Certificate)

Getting DSC for any one of the Director for digital authentication of the Incorporation documents

3 DIN (Director Identification Number)

Approved DIN is a pre-requisite for incorporation process

4 Preparation of Main Object & Name Availability Search
  • Preparation of Main Object by BMC
  • The Promoters have to provide atleast 6 (Six) names in the order of priority
  • To make an online search of availability of names as desired by the Promoters
  • Confirmation of the draft main object & the final name
(Varies by the response time taken by the Promoters)
5 Application for Name Availability
  • Filing of Form 1A with the concerned ROC
6 Application to Regional Director ROC for issue of License
  • Filing of Form 24A
7 Representations before ROC in case of any objections
  • Changes to be made in the relevant documents, as suggested by the ROC
8 Public Notice/Advertisement
  • With in 7 days of application to the ROC
9 Final Process (After issue of license by ROC)
  • Filing all the Incorporation documents with the ROC
  • Online uploading of e-Forms
  • Payment of Registration fees
  • Receiving Incorporation Certificate