Comparison among Trust, Society and Nonprofit Company
 

Type of Organisation

 Criteria Trust Society Section-25 Company before 2014, Now Section 8 Company
1. Statute/Legislation Relevant State Trust Act or
Bombay Public Trusts Act, 1950 in Maharashtra
Gujarat Public Trusts Act in Gujarat
[Private trusts are governed by Indian Trust Act, 1882. Public charitable trusts do not have a national level governing law.]
Societies Registration Act, 1860 Indian Companies Act, 1956 Before 2014 Now Companies Act 2013
2. Jurisdiction Deputy Registrar/Charity commissioner Registrar of societies (charity commissioner in Maharashtra and Gujarat). Registrar of companies
3. Registration As Trust
(In Maharashtra and Gujarat, both as a society and as a trust)
As Society
(In Maharashtra and Gujarat, both as a society and as a trust )
As a company u/s 8 of the Indian Companies Act.
4. Geographical area of activities (Area of operation) Can operate throughout India (no need to mention this in the Trust Deed) A separate registration for All India level is required (8 members from different states required). Can operate throughout India even if registered in one particular State. No separate registration is required for operating in another state. Can also restricted to particular State by Memorandum and Rules All India or specified (need to mention in Memorandum) Can operate throughout India as the registration is granted by the Central Government.
5. Registration Document (Basic Document) Trust deed - which contains objects of the trust (bye-law) Memorandum of Association
Articles of Association with rules & regulations.
Memorandum of Association
Articles of Association and regulations
6. Board of Management
Level 1 (Highest)
Trustees / Board of Trustees Governing body or council Board of directors
7. Board of Management
Level 2 (Appointed Board)
Managing Committee Managing or Executive committee Managing committee or Board of Management (CEO, COO etc)
8. Mode of Succession on Board of Management (Highest) Appointment or Election Appointment or Election by members of the general body Election by members of the general body
9. Stamp Duty Trust deed to be executed on non-judicial stamp paper, vary from state to state (in most of the States 4% of Trust property Value will be executed in non-judicial stamp paper with the registrar) In most of the cases Trusts registered with Society so in the beginning there is no property, so there are some fix Stamp duty varied from state to state No stamp paper required for memorandum of association and rules and regulations. No stamp paper required for memorandum and articles of association.
10. Members Required Minimum – two trustees require to form a charitable trust. No upper limit. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity. Minimum – seven managing committee members are required for formation of state level society. No upper limit.
- Eight members required from separate states for formation of national level society. No upper limit.
Minimum 2 for a private company and 7 for a public Ltd company. No upper limit.
11. Formation Very Easy Simple Little Hard
12. Objects or Objectives Social benefits & Charitable, Can be general Literary, Charitable, Scientific and resource oriented, Have to be specific Any Nonprofit Activities. Mention in Memorandum
13. Re-amendment or 
Modification of Objects or any by-laws
Alteration can be undertaken only by the Founder or settler.
If the founder deceased alteration of objects is impossible. But can easily be done via a supplementary trust deed by founder
As such Easy Legal Procedures. But Relatively more difficult as  Both Memorandum of Association and Rules and Regulations need to be changed Complicated
Legal Procedures
Both Memorandum of Association and Articles of Association need to be Changed.
14. Name Very easy to choose (In some states norms imposed by Judiciary or Government or both) Very easy to choose (In some states norms imposed by Judiciary or Government or both) Prior approval required from Registrar of Companies.
15. General & Board Meetings No provisions are laid down. Adequate rules should be framed in the trust deed, in this regard. Annual General & Board meetings are required to be held as prescribed in the bye laws of the society. Quite Extensive as per the provision of Company Law. Specific provisions have been laid down. At least one Annual General Meeting and four Board meetings are required to be held every year.
16. Legal Status Limited Legal Status Limited Legal Status Full Legal Status
17. Statutory Regulations Nominal or Very Little Limited or Moderate High and Measurable - Exhaustive
18. Membership Transfer Impossible - Membership is not transferable Impossible - Membership is not transferable Free or Control as per desire. Membership can be transferred. Restriction on transfer can also be placed.
19. Member Admission Not applicable Governing Body Control General Body or Board Control through issue of Capital.
20. Dissolution or Take over by State Possible Possible Very risky and difficult
21. Winding-up or Revocable/ Irrevocable
Trust is generally irrevocable, Cannot be wound-up. Societies Can be wound up or dissolved. Dissolution must be approved by at least three-fifths of the society's members. A society, in other words, is a more flexible and democratic set-up. A section 8 Company may be dissolved if majority of the members so desire (in AGM)
22. Payment to functionaries / Members Provision in the trust deed should be there for any such payment. Permitted as per general body approval. Not Restricted As approved by Company & State. Permitted as per general body approval
23. Nature of control One man control, i.e. Settler or Founder Trustee in Private Trust and in Public Trust Board of Trustees (2 or more) Democratic system. Decisions are made by voting. Power struggle may ensue. Controlled by founders mainly but mentioned in Memorandum
24. Bank a/c operation Controlled by one person, Settler Two persons, either President or Secretary and Treasurer Depending upon Memorandum
25. Office holders’ tenure Trustees generally hold office for the whole life Members hold office for a period of time and may stand for re-election Depending upon Memorandum
26. Family members Can become trustees Registrar objects on family members becoming part of the Governing Body Can be part of Governing Body
27. Legal Title Legal title of the property of a trust vests in the hands of trustees.  In a society, all properties are held in the name of the society. In section 8 Company, all properties are held in the name of Company.
28. In case of Inactiveness If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres, meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears that grantors can feel fairly secure that the charitable nature of a trust will be honored, even if the original, specific purposes of the trust cannot be carried out. Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 8 Company, preferably one having similar objects as the dissolved entity.
29. Annual Compliance (Annual Documents to be filed ) There is no requirement of annual return or document filing. The Act requires a list of managing body (having details like names, addresses and occupations of their managing committee members) to be filed every year with the Registrar of Societies. But different states have different requirements for filling additional documents ever year. There is requirement to file annual accounts and annual returns of the company with the RoC.
30. Online filing facility Online filing facility in not available. Compliances are more complicated & time consuming Online filing facility is not available. Everything has to be submitted in the office of Registrar of Societies in hard copy. Compliances are more complicated & time consuming. Online facility is available. The Compliances, like annual filing, appointment & removal of directors, shifting of registered office, increase in capital, change in object clause & others can be done online at MCA portal. It is very easy, time saving and transparent process.
31. Time Period involved in registration/ formation 10-15 days 30-45 days 60-75 days
32. Cost factor Low – Less than 5000/- (Rs. 1000 to 5000) Medium – Less than 10000/- From Rs. 3000 to 10000 High – About 35000/- and more depending upon prescribed capital structure. – Rs. 30000 to 75000
33. Registration with Income Tax u/s. 12A & 80G as NGO At par with society & Section 8 Company. Compulsory within 12 months of its registration At par with trust & Section 8 Company. Compulsory within 12 months of its registration At par with trust & Society. Compulsory within 12 months of its registration
34. From the point of view of Grant of subsidy by the government Less preferred Less preferred Most preferred
35. From the point of view of Foreign Contribution Regulation Act, (FCRA) registration Less preferred. Compulsory for receiving foreign funds. Less preferred. Compulsory for receiving foreign funds. Most preferred. Compulsory for receiving foreign funds.
36. Public Transparency in working Low Low to Moderate High as everything is available online.
37. Change in board of directors/ trustees Members Easy Complex Easy
38. Change of Registered office Difficult Difficult Easy
39. Voting Rights All Trustees have equal rights All members have equal rights The voting rights may vary on the basis of shareholding. This provision can be used for control purposes.
40. Recurring expenditure No statutory recurring expenditure The statutory compliances required are minimal. Consequently recurring expenditure are also negligible. Annual returns & balance Sheet are filed along with certain fees. Again the quantum of expenditure is not significant.
41. Labour & other relevant laws To comply as applicable in particular state. To comply as applicable in particular state. To comply as applicable in particular state.
42. Foreigners as members / Directors No restriction. Varies in some states Not prohibited by law Allowed. Foreigners are allowed. At least one member must be Indian Citizen.
43. Threat in having foreigner on board Difficulties may be faced in getting FCRA registration Difficulties may be faced in getting FCRA registration Difficulties may be faced in getting FCRA registration
44. Annual Costs Rs. 5,000 + Rs. 15,000 + Rs. 35,000 +
45. Paper Work Normal or Little Moderate High and require regularity, perfection and accuracy
46. Penalties under governing law None in most States Few Large Number
       

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