November 30, 2021

All about building Schools

Start a Trust / Society / Section 8 Company for School

Form a Society, Trust, Section 8 Company to start School in India

If you are looking to start a School in India, the first and foremost thing is to form a TRUST, SOCIETY or a SECTION 8 Company. The most important element which one should remember is the entity thus formed has to be Not-For-Profit and Non- Proprietary in nature

Whether you opening a CBSE School, ICSE School, State Board School, IB School or school catering to any board, any school teaching Class I and above has to have TRUST, SOCIETY or a SECTION 8 Company managing the school.

So now there are couple of question which arises which we are seeking answers for;

Question 1: Is this the only way to start a school in India? If so, why?

Question 2: What is the difference between TRUST, SOCIETY or a SECTION 8 Company?

Question 3: Which one is better between TRUST, SOCIETY or a SECTION 8 Company?

Question 4: How do you form a Society, Trust, Section – 8 company?

Question 4: What is this “Non Proprietary” character ?

Question 1: Is this the only way to start a school in India? If so, why?

Answer: YES, this is the only way. You can either start a TRUST, SOCIETY or a SECTION 8 Company but mandatory requirement is it that they should be of Non for Profit and Non Proprietary Character. This is because government is very wary of some unethical private players posturing as educators and exploiting this basic need of every child. By laying this ground rule, Government tries to discourage these forces as much as possible. By making it Not for Profit, Government tries to rein in blatant commercialisation.

Question 2: What is the difference between TRUST, SOCIETY or a SECTION 8 Company?

The above table shows the differences between the three but the aims of establishing any of these stays the same.

Question 2: Which is better between the three – Society / Trust / Section 8 Company?

Of the three Section 8 is most preferred, here are the reasons

  • It is easier to increase the number of directors, it is easier for people donating money to join or leave or transfer shares to others, and such a company is obliged to fulfil far less stringent book-keeping and auditing requirements as against a regular company. This is the biggest advantage in my opinion.
  • The formation just requires two people hence a distinct advantage for promoters who are investing theirown money without any partners.
  • Section 8 companies are much easier to run than Trusts and Societies, as board meetings require a smaller quorum and requirements for calling such meetings are less rigid.
  • Section 8 is preferred by several businessmen because they are conversant with the company structure, while benefits from several exemptions make it easy for philanthropy.
  • A Section 8 Company has more credibility as compared to any other Non-profit organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 Company. A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
  • Those looking to start with Partners – Section 8 is highly recommended, imagine a scenario , Partner is no more in this world, You want to infuse capital through getting moe partners, Partners want to exit the arrangement. It is never easy bit possibly it is easier with Company

Question 3 a: How do you form a Society ?

Societies are membership organizations that may be registered for charitable purposes. They are usually managed by a governing council or a managing committee and are regulated by the Societies Registration Act which has been modified and adopted by various states. Unlike trusts, societies may be dissolved. The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.

Memorandum of association is the charter of a society. It is a document depicting and describing the objects of the its existence and its operations. However, article of association includes rules and regulations of the society under which it works.

A Society needs a minimum of seven managing committee members; there is no upper limit to the number of managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee. The society has a Chairman, Treasurer, Secretary and ordinary members.  There will be some permanent memebers and some temporary members.

One applied for registration, the Registrar of Society will give the society a Registration Certificate.

Here this article on wikipedia is very helpful, I am copying some important lines from the wiki page

Question 3 b: How do you form a Trust ?

Public charitable trusts may be established for a number of purposes, including poverty relief, education, medical relief, the provision of facilities for recreation, and any other objective of general public utility. Indian public trusts are generally irrevocable. No national law governs public charitable trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts. 

  • TRUST DEED: Trusts are registered using a document called TRUST DEED. This document contains all the information about the Trust and is printed/written/typed on plain A4 size papers.
  • Attach a Rs. 100 Non-Judicial stamp paper (which you can get from a notary). All the Trustees and witnesses will have to give thumb impressions and signatures on these papers. All in all, you will need help of a notary to prepare the papers.
  • You may also need a No-Objection Certificate (NOC) from the owner of the property where the registered office of the trust is to be situated. If you’re the owner of the property, then you don’t need to worry about NOC
  • Following elements must be mentioned in the Trust Deed document:
    • Name and address of the Settler (Settler is the person who is setting up trust)
    • Name(s) and address(es) of the other trustees
    • Name of the trust
    • Minimum and maximum number of trustees your trust can have
    • Address of the registered office of the trust
    • Objectives of the trust
    • Rules and Regulations of the trust
  • For registering a trust you need minimum two trustees (i.e. one settler and another person). You can decide the maximum number of trustees and this number must be mentioned in the trust deed. All the trustees together are called Board of Trustees. This board collectively governs the trust.
  • All the trusts are allowed to work on all India level
  • Trusts are irrevocable –unless it is mentioned in the trust deed. This means that the trust cannot be wound up
  • Trustees are usually life-long members or their tenure is specified in the deed. Electoral process is not involved in the appointment of trustees.
  • Board of Trustees can also have various designations for trustees. Common designations are Chairperson and Managing Trustee.

Here this article on wikipedia is very helpful, I am copying some important lines from the wiki page

Question 3 C: How do you form a Section – 8 company ?

The formation of Section 8 Company happens through the portal of Ministry of Corporate Affairs. The steps are following

  • A form called INC-1 is filed for the naming the proposed Section-8 company. The form in online and is called as Form meant to RESERVE THE COMPANY’s NAME. The promoters have to ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014. The name also should be unique. To search for the name, here is the service by the MCA
  • Fill INC 12 – Click here for the form. This form is for the request of the Granting of the permission.
  • Attach a draft copy of the Memorandum of Association (MOA) and Articles of Association (AOA). There is a prescribed format for Memorandum of Association of a Section 8 company in Form INC 13. 
  • Also one has to attach the following to the application – Estimated statement of Income & Expenditure for the next three years, List of Directors,
  • There are other FORMS like INC – 7, INC – 8, INC – 9, INC – 12, INC – 13, INC – 14, INC – 15, INC – 16, INC – 22 and DIR – 2, DIR – 3, DIR – 12, which one has to fill giving detailed information about company’s particulars.
  • One has to obtain Digital Signature Certificates (DSC) of the proposed directors.

Question 4: What is this “Non Proprietary” character ?

Answer: Not for Profit or Non Proprietary means the members of the  managing committee of the society  in No Way can withdraw PROFIT coming out of the business of the society or the trust for their personal gain. The Profit simply explained in business parlance will be BOTTOM LINE. Money should be channelized within the ambit of the not-for-profit areas of focus and its functional areas. Profit should be used only for the development and betterment of the objectives and aims of the entity.

StateAddressLink
Uttar PradeshRegistrar of Cooperative Societies ,
Govt. of Uttar Pradesh, 14 Vidhan Sabha Marg
3rd Floor, Vikasdeep, Lucknow, Uttar Pradesh 226001
http://cooperative.up.nic.in
ChhattisgarhRegistrar of Cooperative Societies ,
Govt. of Chhattisgarh, Block - 3, 2nd and 3rd Floor,
Indrawati Bhawan, New Raipur
Tel : 0771 2511921
http://rfas.cg.nic.in/Contact_us.aspx
Madhya PradeshRegistrar Firms & Societies
Department of Commerce & Industries
Government of Madhya Pradesh
D-Wing, First Floor, Vindhyachal Bhawan,
Bhopal [M.P.]
http://registrarfirms.mp.gov.in
PunjabDirectorate of Industries, Ponch House, Lahore (Next to Chuburji)
Phone : 0092-42-99211520-21
Fax : 0092-42-99211522
http://dicludhiana.gov.in/frmSocietyRegistration.aspx
BiharCompletely Online1) https://biharregd.gov.in/Society/Home.aspx

2) https://biharregd.gov.in/Society/Online/Society_Registration.pdf
RajasthanRegistrar of Cooperative Societies ,
Govt. of Rajasthan, Nehru Sahakar Bhawan,
Bhawani Singh Road, Jaipur 302 001
1) http://rajcooperatives.nic.in
2) http://forms.gov.in/RJ/5077.pdf
JharkhandGround Floor, Engineer's Hostel - I, Near Golchakkar, Dhurwa, Ranchi, Jharkhand.http://www.jharkhand.gov.in/office-of-registrar-cooperative
West BengalDepartment of Cooperation,
Government of West Bengal
New Secretariat Building(4th Floor),
1,K.S.Roy Road,Kolkata-700001
http://coopwb.in/aboutus.html
MaharashtraCommissioner for Cooperation
Registrar of Cooperative Societies
2nd Floor, New Central Building,
Ambedkar Wellesly Rd,
Pune, Maharashtra 411001
Tel.: 020 2612 2846 ‎
https://sahakarayukta.maharashtra.gov.in/Site/Home/Index.aspx
Tamil NaduNo.100, Santhome High Road, Chennai 600 028.http://www.tnreginet.net/english/society.asp
KeralaInspector General,
Departmernt of Registration,
Vanchiyur P.O
Thiruvananthapuram.
Kerala - 695035
regig.ker@nic.in
contact 0471-2472118, 2472110
http://keralaregistration.gov.in/?lang=eng
Andhra PradeshOffice of the Commissioner & Inspector General of Registration and Stamps,
5-59, R.K.Spring Valley Apartments,
Edupugallu, Kankipadu Mandal,
A.P, Vijayawada - 521151
http://www.registration.ap.gov.in
TelenganaD-Block, 4th Floor, Telangana Secretariat, Hyderabad-500022.
Office : 040-29801057
https://registration.telangana.gov.in/registrationsociety.jsp
KarnatakaRegistrar of Cooperative Societies in Karnataka, Address: 1, Ali Asker Rd, Bengaluru, Karnataka 5600521) http://sahakara.kar.gov.in/ContactUs.html
2) http://www.karnataka.gov.in/karigr1/Pages/Societies-Registration-Act-and-Rules.aspx
Himachal PradeshBlock No.25, SDA Complex, Kasumpti, Shimla, Himachal Pradesh 171009https://coophp.nic.in/
UttarakhandRegistrar of Cooperative Societies,
Govt. of Uttarakhand, Uttaranchal Secretariat,
4-B, Subhas Road, Dehradun 248001
Tel : 2713534
FAX: 2712268
society.uk.gov.in/
HaryanaBays No. 27-30, Sector-2,
Panchkula-134109.

Phone No. : 0172-2585023, 2583438
http://rcsharyana.gov.in/contact-us.htm
GujaratRegistrar of Cooperative Societies ,
Govt. of Gujarat, Block No 10, 1st Floor, Old Sachivalaya
Gandhinagar 382 010
Tel : 079-23253868, 079-23253862 ,
FAX: 079-23253877, 079-23253876
https://rcs.gujarat.gov.in/introduction.htm
ManipurGovernment of Manipur
4th floor, Western Block
New Secretariat,
Manipur-795001
http://manipur.gov.in/?page_id=1697
AssamRegistrar of Cooperative Societies ,
Govt. of Assam, Lakhtokia, Guwahati 781 001
Tel : 0361-2545334 ,
FAX: 0361-2545994
http://assam.gov.in/web/registrar-of-firms-and-societies
MeghalayaRegistrar of Cooperative Societies

New Administrative Building
Lower Lachumiere, Shillong-793001
East Khasi Hills District, Meghalaya
Phone Number : 0364 - 2225212
http://megcooperation.gov.in
TripuraO/O the R.C.S. Govt of Tripura. 1st Floor & 2nd Floorhttp://tripura.nic.in/coop/
NagalandRegistrar of Co-operative Societies
A.G. Office Road
Kohima, Nagaland-797001
http://nagalandcooperatives.com/page.aspx?page=legal_nsca
SikkimGovernment of Sikkim
Annexe 1, Top Floor, Kazi Road
Gangtok , Sikkim-737101
https://www.sikkim.gov.in/portal/portal/StatePortal/Department/CooperationDept
OdishaNear State Bank Of India, Kharvel Nagar, Bhubaneswar, Odisha 751001http://rcsorissa.nic.in
GoaTHE REGISTRAR
THE OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES

‘SAHAKAR SANKUL’
4 & 5 FLOOR, EDC COMPLEX,
PATTO, PANAJI – GOA
Tel:No: +91 - 832- 2437165/2437175/2437134
Email : reg-orcs.goa@nic.in
http://www.coopgoa.gov.in
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