What are Section 25 Companies?
 Section 25 Companies are those companies which are
incorporated for promoting art, commerce, science,
religion or any other charitable object.
 Section 25 Company avails the same benefit as of trust
and society which are established under different/
separate laws in India.
Basic Details of Section 25
Companies
 Section 25 companies requires license granted by the
central government recognizing them as such
company.
 These companies enjoys all advantages that other
limited company registered under companies act
requires.
Apart from that, they also enjoy some other
privileges too.
Benefits of Section 25 Company
 1. No minimum Share Capital is required to register
section 25 Companies.
 2. A general meeting can be called by giving a notice
of not less than 14 days in writing.
 3. The period for preservation of books of account and
other papers in case of section 25 companies is 4 years
immediately preceding the current year.
 4. No need of Approval of Central Government for
increase in number of directors beyond 12.
 5. Easy to regulate and operate as there are no
interference of RD in day to day affairs of the
company.
Obligations & Limitations on Section 25
Company
1. A Section 25 Company has to ensure that its profits and all other
incomes are utilized only for the purpose of promoting its objects
and not for any other purpose.
2. It should also ensure that its profits are not distributed as dividend
its members.
3, Section 25 Company cannot alter its objects clause in its
Memorandum without seeking the written approval of central
government.
4, If an existing company obtains a license under section 25 it has to
ensure that its objects are confined to those mentioned in section 25
itself and if not make proper alteration to its memorandum and
articles.
Procedure:
(1) Make application in form 1A to ROC for name approval.
(2) Once the name is approved make an application to Regional Director for
granting license under section 25.
(3 ) Application should be accompanied by
(a) MOA and AOA
(b) Particulars about directors
(c) Declaration as per annexure V of the Companies Regulation Act,
1956.Form 32
(d) The application for registration should be made to the official
having jurisdiction over the region in which the trust is sought to be
registered.
Time Duration
It takes around 10-12 working days to complete the total incorporation
process of Section 25 Company.
Dissolution
1. May be dissolve voluntarily….
2. No surplus can be distributed amongst members
post settling liabilities
3. Surplus can be transferred to another Sec 25
Company preferably one having similar entity
Substitutes of Section 25 Company
(1).Charitable Trust:- The public charitable trust is a possible form of
not-for-profit. Typically, public charitable trusts can be established for a
number of purposes, including the relief of poverty, education, medical
relief, provision of facilities for recreation, and any other object 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.
(2).Societies:- Societies are membership organizations that may
be registered for charitable purposes. Societies are usually managed by a
governing council or a managing committee. Societies are governed by the
Societies Registration Act 1860, which has been adapted by various
states. Unlike trusts, societies may be dissolved.
INDIAN COMPANIES LAW: SECTION 25
COMPANY
By:
Vinay Gupta
Partner,
Vinaykgupta&.co
https//Indianconsultant.co.in